The president-elect cited Richardson's vast experience in Washington in announcing his nomination. Richardson had served as energy secretary and U.N. ambassador, as well as a congressman and two-term governor of New Mexico.
"With his breadth and depth of experience in public life, Governor Richardson is uniquely suited for this role as a leading economic diplomat for America," Obama said. "Bill brings both international stature and a deep understanding of today's global economy."
Though Richardson previously served in appointed positions under President Clinton in the '90s, he endorsed Obama over Hillary Clinton in the Democratic primaries. Richardson himself dropped out of the Democratic primary race in January.
He was talked about for the secretary of state position, before Obama named Clinton to the post.
Richardson did not appear slighted, saying the post puts him at the center of the next administration's efforts to lift up the ailing economy.
"There's a vital role for the Department of Commerce in our economy recovery," Richardson said, calling the department "the natural agency to serve as the programmatic nerve center in America's struggle to rejuvenate our economy."
Richardson, who is Hispanic, delivered a portion of his remarks in Spanish.
Under New Mexico law, Lt. Gov. Diane Denish will take over for Richardson -- becoming the state's first female governor. She would serve until 2010, when she would have to run for re-election.
On Monday, Obama announced his foreign and national security team, led by Clinton and current Defense Secretary Robert Gates, a Republican. A week ago, Obama named his economic team, led by Timothy Geithner as treasury secretary. In the coming weeks if not days, he plans to announce former Senate Majority Leader Tom Daschle as health and human services secretary.
The upper echelon on his Cabinet now is in place.
Among those posts yet to be disclosed if not chosen: the heads of the Interior, Transportation, Labor, Energy, Housing and Urban Development, Education, Agriculture and Veterans Affairs departments. Obama also has yet to name his intelligence team, including his director of national intelligence and CIA chief.
The Associated Press contributed to this report.