United States Defence Secretary Donald Rumsfeld, who came in for severe criticism for the conduct of the war in Iraq, resigned on Wednesday.
Former Central Intelligence Agency director Robert Gates has replaced him.
The move comes soon after the mid-term polls, where the Democrats defeated the Republicans.
Addressing the media, US President George W Bush announced Rumsfeld's exit and Gates' appointment after acknowledging that the administration's handling of the Iraq war played a major role in giving the Democrats control over the House of Representatives.
"After lots of consultation with Rumsfeld, we agreed that the time is right for a new leadership in the Pentagon," Bush said.
"Bob Gates will bring a fresh perspective and good managerial abilities," he said.
Democrat representative Nancy Pelosi of California, who is likely to become the leader of the House, welcomed Rumsfeld's resignation and said, "I think it will give us a fresh start."
Bush said he met Gates, who headed the Central Intelligence Agency from 1991 to 1993 and is currently president of Texas A and M University, on Sunday to discuss the appointment, even before the election was held.
"He is a steady, solid leader who can help make the necessary adjustments in our approach to meet our current challenges," Bush said.
"If confirmed by the Senate, Bob will bring more than 25 years of national security experience and a stellar reputation as an effective leader with sound judgment," he said.
"He served six presidents from both political parties and rose from an entry-level employee in the CIA to become the director," he said.
Gates has also been working on the bipartisan Iraq Study Group, which is due to present Bush with policy recommendations on the Iraq crisis in the coming weeks. In reply to a question whether the replacement of Rumsfeld indicated a new direction in the Iraq war, Bush said, "Well, there's certainly going to be new leadership at the Pentagon."
Bush praised 74-year-old Rumsfeld, whose six-year tenure at the Pentagon was mired in controversy.
Rumsfeld was in his second tour of duty as defence chief.
He first held the job a generation ago, when president Gerald Ford appointed him.
Last week, during campaigning, Bush declared that Rumsfeld would remain at the Pentagon through the end of his term.