The 53-year-old Fields has been Ford's chief operating officer since late 2012, and has been running executive meetings and day-to-day operations. He was widely seen as Mulally's heir apparent.
Ford wasn't expected to make the transition until year end, but said it moved up the schedule at Mulally's request. Mulally, 68, who came to Ford from Boeing in 2006, is credited with transforming the automaker from a dysfunctional money-loser to a thriving company.
In orchestrating that transformation, Mulally relied heavily on a strategy that Fields drew up in 2005, when Ford's big North American division was losing money, burdened by too many factories and lackluster car designs. Fields's plan called for closing factories, laying off thousands of workers and using Ford's design expertise in Europe to build better cars that could be sold globally.
Bill Ford told The Associated Press that Fields is humble about his achievements. But he has been an advocate within the company for advanced technology and better products.
"Every job the company's ever asked him to do, he's done a really good job of it," Bill Ford said.
Fields takes the CEO job during a transition year at Ford. The company expects pretax profit to fall to between $7 billion and $8 billion from $8.5 billion in 2013, as it launches a record 23 vehicles worldwide and builds seven plants, including four in China. It's also preparing to launch a new aluminum-clad F-150 pickup truck later this year, which could reap profits down the road but will be expensive to prepare for.
Ford's top executives said Thursday that the system of transparency and accountability that Mulally has instilled will help the company deal with future challenges.
"We know how to deal with reality now, and we can deal with it in a way that's positive and collaborative," Bill Ford said.
Mulally had spent 36 years at Boeing - and was president of the company's commercial airplane division - when Bill Ford lured him to the struggling automaker eight years ago. Mulally overcame skepticism about being an outsider in the insular ranks of Detroit car guys by quickly pinpointing the reasons why Ford was losing billions each year. He put a stop to the infighting that had paralyzed the company and instituted weekly management meetings where executives faced new levels of accountability and were encouraged to work together to solve problems.
According to Bill Ford, now executive chairman, Fields embraced Mulally's call for change early on, even though he had been passed over for the CEO job. Bill Ford said Fields' decision to stay at Ford and learn from Mulally showed a lot of fortitude. Mulally helped smooth some of the rough edges that had sometimes made the Brooklyn, N.Y.-born Fields hard to work with.
"I have nothing left to teach or tell Mark about. He knows everything," Mulally said.
Bill Ford said Fields will be a collaborative leader, just like Mulally, but "with not as much hugging." Mulally is famous for his wide grin and bear hugs.
This marks the second change in leadership at the top of one of the Detroit automakers this year. Mary Barra took over as CEO for Dan Akerson at General Motors in January.
Fields joined Ford as a market research analyst in 1989 and quickly rose through the company's ranks. In 2000, he became the youngest CEO ever at a Japanese company when Ford installed him as head of Mazda Motor Co., which Ford controlled at the time.
There, he oversaw the catchy "Zoom Zoom" ad campaign. He was later head of Ford's European division and its luxury brands, which struggled with losses despite his tough medicine, including the closure of a historic Jaguar plant in Britain.
Fields returned to Ford's Dearborn headquarters in 2005 to become president of the Americas. That's where he developed the plan that later became Ford's "Way Forward."
Supporters say Fields is an excellent strategist with a deep knowledge of the business. His international experience is invaluable as Ford restructures its European operations and focuses on growth in volatile young markets like Asia and South America.
Fields is known for sharp suits and a bit of a swagger. He was raised in Paramus, New Jersey, the youngest of three sons; his father was the purchasing manager at a sprinkler company and often talked business at the kitchen table.
At the New York Auto Show in April, Fields showed a home movie of his family at the 1964 World's Fair in New York. He remembered the excitement of the crowd when he was lifted on his father's shoulders to see the new Ford Mustang.
He's been a car guy since he was eight, when his father bought him his first two Matchbox cars, which he still has. He also still owns his first car, a Datsun 280Z, which he bought in 1983.
Fields earned a bachelor's degree from Rutgers University in 1983. He sold computers for IBM before earning an MBA from Harvard Business School in 1989.
Like Barra, who became the first female CEO of a big automaker at GM, Fields will be breaking a mold at Ford. He is the first Jewish chief executive at the 111-year-old company.
Ford shares fell 12 cents to $16.03 in early trading.