The Academy Awards show's producer said Stewart has many of the qualities of previous masters of ceremonies.
"Jon is the epitome of a perfect host — smart, engaging, irreverent and funny," producer Gil Cates said.
Stewart, 43, hosts Comedy Central's "The Daily Show with Jon Stewart," which has earned seven Emmys and a Peabody award. He also won the 2005 Thurber Prize for American Humor for his book, "The Daily Show with Jon Stewart Presents America (The Book): A Citizen's Guide to Democracy Inaction."
Stewart, who will host the Academy Awards telecast for the first time, also has appeared in several movies, including "The Faculty," "Death to Smoochy" and "Big Daddy."
"As a performer, I'm truly honored to be hosting the show," Stewart said, then joked: "Although, as an avid watcher of the Oscars, I can't help but be a little disappointed with the choice. It appears to be another sad attempt to smoke out Billy Crystal."
Stewart follows a long line of standup comedians who have hosted the Oscars. Over the years, Bob Hope, Johnny Carson, Whoopi Goldberg and Crystal have held down the podium.
Speculation swirled after Chris Rock's departure about who would replace him. Frequently mentioned candidates included Goldberg, Steve Martin and late-night hosts Jay Leno and Conan O'Brien.
Rock drew younger viewers to last year's telecast, but his barbs skewering stars like Jude Law, Tobey Maguire and others alienated some academy members. Rock is currently producing and narrating "Everybody Hates Chris," a sitcom on UPN based on his life.
The 78th annual Academy Awards will air March 5 on ABC from Hollywood.