The 42-year-old Kashkari's term will start at the beginning of next year. He replaces Narayana Kocherlakota, who has held the position since 2009 and announced last year he would not seek reappointment.
Kashkari, who ran for governor of California in 2014, was most recently active in the private sector as a managing director at Pimco. From 2006 to 2009, he served in the U.S. Department of the Treasury as an adviser to former Secretary Hank Paulson and then as assistant Treasury secretary.
He oversaw the Troubled Asset Relief Program in the wake of the U.S. financial crisis.
"Mr. Kashkari is an influential leader whose combined experience in the public and private sectors makes him the ideal candidate to head the Minneapolis Fed," said MayKao Hang, incoming chair of the Minneapolis Fed's board of directors.
The Minneapolis branch is an alternate member on the Fed's policy-making committee next year and a voting member in 2017.