Bush's announcement, received internationally with mostly positive reaction, comes at a time of turmoil at the World Bank. Zoellick, 53, would take over after Wolfowitz steps down June 30 after a special bank panel found that Wolfowitz broke bank rules when he arranged a hefty compensation package in 2005 for his bank employee girlfriend, Shaha Riza.
Zoellick, a Goldman Sachs executive, now faces the challenge of building trust and credibility. Zoellick must win approval by the World Bank's 23-member board.
Zoellick promised to help the World Bank get past the scandal, saying the poverty-fighting institution's "best days are still to come."
"The World Bank has passed through a difficult time for all involved. There are frustrations, anxieties and tensions about the past that could inhibit the future,” Zoellick said from the White House after Bush spoke. “This is understandable, but not without remedy.”
Bush touted Zoellick's long list of accomplishments qualifying him to take over the reins of the poverty-fighting institution.
"Bob Zoelllick brings a wealth of experience and energy to this task," Bush said during the announcement from the White House. "He is deeply devoted to the mission of the World Bank."
• Click here to read Zoellick's biography.
The World Bank has a vital mission to overcome poverty and despair, Zoellick said.
“It would be an honor to help lead this key institution and to work with the many fine professionals from all over the world who are dedicated to overcoming poverty and creating opportunity," he added.
Bush thanked Wolfowitz, who was not present at the announcement, for his service and accomplishments at the World Bank, calling him a "man of character and integrity."
Zoellick stepped down from his post as deputy secretary of state last year to join the Wall Street firm of Goldman Sachs.
The bank's new leader will have to persuade countries to contribute nearly $30 billion over the next few years to fund a centerpiece bank program that provides interest-free loans to the world's poorest countries.
"The test of Zoellick is whether he manages to turn around the bank, which has been in huge disarray," said Elizabeth Stuart, senior policy adviser for Oxfam International, a group involved in helping the world's poor.
Zoellick could build upon strong relations he has developed worldwide as deputy secretary and U.S. trade representative. He was involved in peace talks in Sudan and as USTR, he played a key role in negotiations to bring China into the World Trade Organization. He forged free trade deals between the United States and other countries, including Singapore, Chile, Australia and Morocco.
Some global health and environment groups expressed concerns over Zoellick as the next bank chief.
Peru, however, welcomed the selection.
"My impression is that it's a good choice President Bush is making," Peruvian Foreign Trade Minister Mercedes Araoz told The Associated Press. "He was a driving force of the U.S. trade agenda in seeking association with developing countries, among them Peru."
"Professionally, he's competent but I'm not so sure about his background in developing economies or in helping developing countries," said Charad D. Wadhva, professor emeritus at the Center for Policy Research, a New Delhi think tank. "He may have to learn a lot to understand the needs of the developing countries. He understands the needs of the developed countries very well. "
The Associated Press contributed to this report.