A party convention endorsed the 57-year-old state governor, who stood unopposed, by a margin of 444-14. He replaced Matthias Platzeck, becoming the fourth chairman of former Chancellor Gerhard Schroeder's party in little more than two years.
The party is now an equal partner in Merkel's left-right "grand coalition." However, a strong start by the chancellor has seen her conservatives build a roughly 10-point poll lead.
Beck, a former electrician and the son of a bricklayer, is now Merkel's likeliest challenger when Germany next votes, probably in 2009.
He has a pragmatic reputation but has made clear that he will emphasize what sets his party apart from her Christian Democrats. He told delegates Sunday that "we will remain distinctive."
Recalling Schroeder's opposition to the U.S.-led war in Iraq, he said of the dispute over Iran's nuclear ambitions: "We back a diplomatic solution; we do not under any circumstances back a military option."
At home, "we will not let this society split into those who are on the inside and those on the outside," he said. "We will not let everything that is important to us ... be subjugated to economics."
Beck has said taxes may have to rise in the future to finance social spending and insists the Social Democrats, or SPD, will stand up for employees' rights.
But, while shoring up the party's left-wing credentials, he rules out a future coalition with the Left Party — a combination of former communists and ex-Social Democrats alienated by Schroeder's efforts to trim the welfare state.
Beck hopes to calm a party unsettled by public squabbling and frequent leadership changes.
Platzeck quit in April after only five months in charge because of health problems — making way for Beck, his deputy.
Platzeck stepped in after the previous leader, Franz Muentefering, quit in a dispute over who should take another top party post. Muentefering, now Merkel's vice chancellor, took over the leadership from Schroeder in 2004.
Beck, whose down-to-earth image has made him popular with voters, has governed the western state of Rhineland-Palatinate for nearly 12 years. He is keeping the governor's job.
He ran his region in a coalition with the business-friendly Free Democrats until he won a majority for the SPD in March.
Beck, who is married with one son, says he has nothing against being compared with another governor of his state who rose to national prominence — conservative former Chancellor Helmut Kohl.
"Kohl had, and has, a nose for power," he told Sunday's edition of the Frankfurter Allgemeine newspaper. "That goes for me too."
Beck will now have to keep both an uncomfortable coalition partner and the Social Democrats' traditional left-wing supporters satisfied.
Facing criticism from her own supporters for concessions to the center-left, Merkel said last week that "we have quite painful decisions to make — with a coalition partner that has been known for not always being particularly keen on change."
Beck dismissed that charge, but he faces opposition to radical economic reform from unions — traditional SPD backers.
"I value Kurt Beck as someone who knows where he comes from," Michael Sommer, Germany's top union leader, told Sunday's conference.
"The SPD must above all be the party of ordinary people."