Anton Vaino is Russia's new chief of staff while Sergei Ivanov will take up his new postion as special representative for ecology and transport.
A month before parliamentary elections, Russian President Vladimir Putin on Friday replaced his close ally and powerful chief of staff Sergei Ivanov, in the highest-level change inside the Kremlin in several years.
Anton Vaino, 44, has been named as his successor.
Viano will be responsible for drafting laws for the president to submit to parliament, monitoring their enforcement and conducting analysis of domestic and foreign affairs for the president.
Personnel changes in the Kremlin's inner circle are rare and Putin is often described as valuing loyalty above all else.
The latest switch follows a reshuffle of regional leaders last month.
Many observers had considered Ivanov a leading candidate to take over from Putin as president when his second term ended in 2008.
But the Kremlin strongman handed over the top job to current Prime Minister Dmitry Medvedev before reclaiming it in 2012.
The Kremlin said in a statement that Putin had "decreed to relieve Ivanov of his duties" and handed him a job as a special representative for conservation, environmental and transportation issues.
Russian state-media aired footage of Putin thanking a smiling Ivanov for his work and presenting the move as a mutual decision.
"I understand your desire to move to another sphere of work," Putin said, saying Ivanov would become his special representative for ecology and transport.
Ivanov said he had asked Putin to move him on from the post after four years and that he had done the job for four years and eight months.
His replacement Vaino, a 44-year-old ex-diplomat, has served as his deputy since 2012. Vaino is the grandson of a Soviet-era Communist Party boss of the Baltic republic of Estonia.
"Thank you for your trust," Vaino told Putin.
"I consider the administration's most important task is to support your activity as head of state."
Ivanov's dismissal comes as Russia gears up for parliamentary elections next month against a backdrop of economic crisis caused by Western sanctions over the crisis in Ukraine and falling oil prices.
Putin recently reshuffled a string of top regional officials in a move experts say is aimed at helping the Kremlin shore up the vote across the country.
Russia is set to hold its next presidential election in 2018.
Putin is widely expected to run again for a new term.