Krzanich, 52, an Intel veteran and current COO has progressed through a series of technical and leadership roles has been at the chip maker since 1982.
Krzanich, Intel's chief operating officer since January 2012, will become the sixth CEO in Intel's history.
Intel, who's profit has slid in the face of the popularity of mobile devices has sought to introduce major change and diversify its processor market, as the traditional PC industry slumps.
Last month, the chip maker announced 25% drop in profit, with revenue slumping in all its major businesses including PC, Architecture and Data Centre groups.
Intel also announced the appointment of a female to the role of president Renee James, 48, as Intel's new president. She will also assume her new role the same day as Krzanich, and will join him in Intel's executive office.
Shares rose marginally after the news, which was considered by watchers to be the "safe choice", rather than appointing an outsider.
"Our initial feedback has been that this is not a big surprise," UBS analyst Stephen Chin told MarketWatch.
"Given the history of Intel choosing internal CEOs, this was widely the expectation of shareholders. We see it as a safe choice."
As chief operating officer, Krzanich led more than 50,000 employees spanning Intel's Technology and Manufacturing Group, Custom Foundry, NAND Solutions group, Human Resources, Information Technology and China strategy.
Krzanich said he was "deeply honored by the opportunity to lead Intel."
"We have amazing assets, tremendous talent, and an unmatched legacy of innovation and execution. I look forward to working with our leadership team and employees worldwide to continue our proud legacy, while moving even faster into ultra-mobility, to lead Intel into the next era."
"Brian is a strong leader with a passion for technology and deep understanding of the business," said Andy Bryant, chairman of Intel.
"He has the right combination of knowledge, depth and experience to lead the company during this period of rapid technology and industry change."
Otellini will formally step down as CEO and from the board of directors on May 16.