Rutte will take over from Secretary General Jens Stoltenberg on October 1 after major powers -- spearheaded by the United States -- agreed on his nomination ahead of a summit of NATO leaders in Washington next month.
"Mark is a true transatlanticist, a strong leader and a consensus-builder," Stoltenberg said on social media after NATO ambassadors approved the appointment.
"I know I am leaving NATO in good hands," he said.
Rutte said it was a "tremendous honour" to take over from Stoltenberg once his decade at the helm of NATO ends.
"The alliance is and will remain the cornerstone of our collective security. Leading this organisation is a responsibility I do not take lightly," he posted online.
The seasoned Dutch leader, whose 14-year tenure leading the Netherlands is set to end within weeks, is seen as a safe pair of hands capable of stewarding NATO through perilous times.
His appointment was welcomed by leaders across the 75-year-old alliance, including British Prime Minister Rishi Sunak and Germany's Chancellor Olaf Scholz, who called it "a good choice for freedom and security".
The White House said US President Joe Biden believed Rutte "will make an excellent secretary general".
While the 57-year-old faces the possibility of a possible return by former US president Donald Trump to the White House, who has long criticised the alliance, Rutte will also have to grapple with the threat posed by Russian leader Vladimir Putin.
After staking a claim for the NATO post following the collapse of his Dutch coalition government last year, Rutte had to use all his diplomatic skills to win over reluctant allies Turkey and Hungary.
He finally clinched the race last week when his sole challenger, Romanian President Klaus Iohannis, dropped out.
- Back Ukraine, tame Trump? -
A staunch supporter of Ukraine, the straight-talking Dutchman has spearheaded a push to give Kyiv F-16 fighter jets to help beat back Russia's invasion.
As NATO chief he will play a key role in marshalling allies to keep backing the war-torn country -- while treading a fine line over Kyiv's push to join the alliance.
"We anticipate that our joint work to ensure the protection of people and freedom throughout our entire Euro-Atlantic community will continue at good pace," Ukraine's President Volodymyr Zelensky wrote on social media.
The Kremlin's 2022 assault on Ukraine has reinvigorated an alliance that often struggled for purpose after the end of the Cold War, and pushed European nations to increase their defence spending.
Rutte will now have to ensure NATO is fighting fit to deal with the threat Moscow could pose for years to come, and also keep a keen eye on the growing might of China.
Most testing, however, could be the challenge of keeping the alliance together if Trump reclaims the presidency.
Trump reportedly mulled pulling the military superpower out of NATO during his first term, only to be talked down by leaders including Rutte.
On the campaign trail this time around, the volatile former reality TV star has rattled allies by saying he would encourage Moscow to attack countries not spending enough on defence.
It is not just the United States that is facing political uncertainty, as crunch elections are also coming up in other key countries like France.
Rutte will look to learn from his predecessor Stoltenberg, who has headed NATO through its most consequential decade since the Cold War ended.
The unflappable former Norwegian prime minister won plaudits for maintaining unity and strengthening NATO through a tumultuous period.
NATO had to extend Stoltenberg's tenure twice as it struggled for two years to replace him, with many allies initially hoping to name a woman and someone from eastern Europe to take over.
Rutte will be the fourth Dutchman to head the alliance since it was founded upon the ashes of World War II to face off against the Soviet Union.
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