The nomination of Esper, who was this week elevated to acting Pentagon chief from his post as Army Secretary, was announced hours after Trump revealed he had come close to authorising a strike on Iran after it shot down an American drone.
Donald Trump has nominated Mark Esper to be the US Secretary of Defense, the White House said late on Friday, as Washington navigates a spike in tensions with Iran.
There hasn't been a full defence secretary since the resignation of James Mattis in December last year after splits in the administration over Trump's sudden decision to remove US troops from Syria.
Esper, who must be confirmed by the Senate, is the third man to lead the Pentagon in six months.
He replaces Patrick Shanahan, who also led the military in an acting capacity but this week withdrew his name from consideration for defence secretary after facing questions over his past personal life and an allegation of domestic violence.
The new upheaval in what is one of the most powerful posts in the US government comes amid rising tensions in the Middle East.
Trump said on Friday the United States was "cocked & loaded" to strike Iran but pulled back at the last minute because it would not have been a "proportionate" response to Tehran shooting down an American drone.
The downing of the drone — which Iran insists violated its airspace, a claim Washington denies — has seen tensions between the countries spike after a series of attacks on tankers the US has blamed on Tehran.
Unlike Shanahan, who had no military experience, 55-year-old Esper served in the 1991 Gulf War as part of the famous 101st Airborne Division of the US Army.
Esper had been a senior executive at the Raytheon defence firm for seven years when he was tapped by Trump to be Army Secretary in 2017.