The president-elect called Richardson a leading "economic diplomat for America. During his time in state government and Congress, and in two tours of duty in the Cabinet, Bill has seen from just about every angle what makes our economy work and what keeps it from working better."
Richardson, 61, was United Nations ambassador and energy secretary during the Clinton administration, and he is in his second term as New Mexico's governor. He also served seven terms in the House of Representatives.
If confirmed by the Senate, he would take over a sprawling department that oversees the National Weather Service, the Census Bureau, economic development programs and more.
One of the nation's most prominent Hispanic politicians, Richardson pledged - in English and Spanish - to work to renew the economy.
He will become the latest former Democratic primary opponent to join Obama's Cabinet. The incoming chief executive has chosen another adversary-turned-ally, Hillary Rodham Clinton, to be his secretary of state. Obama also chose former rival Joe Biden as his vice presidential running mate.
Obama is considering another Hispanic politician, California Democratic Rep. Xavier Becerra, to be U.S. Trade Representative, according to two Democratic officials speaking on a condition of anonymity ahead of an announcement for the position.
New Mexico's Lt. Gov. Diane Denish, a Democrat will become the state's first female governor when Richardson leaves to assume his new post. Denish will take over for the remainder of Richardson's term, which runs through 2010.
In neighboring Arizona, the ascension of a Democratic governor will put the state in the hands of a Republican governor.
Under Arizona state law, the move of Gov. Janet Napolitano to secretary of Homeland Security will mean a Republican, Arizona Secretary of State Jan Brewer, will assume the reins there.
The president-elect has moved quickly to fill out his Cabinet, having named more than half of it in the month since he was elected the country's 44th president.
An energy secretary and United Nations ambassador in President Bill Clinton's administration, Richardson was a contender for the State Department job, but Obama offered him the post as commerce secretary after choosing the former first lady as his top diplomat.
Among those Cabinet posts yet to be disclosed if not chosen: the heads of the Interior, Transportation, Labor, Energy, Housing and Urban Development, Education, Agriculture and Veterans Affairs departments. Obama also has yet to name his intelligence team, including his director of national intelligence and CIA chief.