Manchester will choose an elected mayor next May, when the roles of existing interim mayor and elected police and crime commissioner are merged.
Burnham said it was a "great honour" to be selected as he overcame competition from Burt South MP Ivan Lewis and interim mayor Tony Lloyd in a vote by local party members.
Burnham failed in his bid to become Labour leader after the 2015 election, and has previously expressed an interest in running for the same role in Manchester.
As MP for Leigh, Burnham has held several roles in his time in Parliament, most recently shadow home secretary, but he also served as health secretary while in government, and spent time as Labour's chief secretary to the Treasury.
It is widely expected that Burnham will now secure the mayoral position. While Manchester is a Labour stronghold, Burnham is also popular in the north after campaigning for justice following the 1989 Hillborough disaster.
He is up against Conservative councillor Sean Anstee and Ukip candidate John Bickley - who lost out to Labour's Jim McMahon in the Oldham by-election last year.
Burnham's election will come after Labour's Sadiq Khan was elected mayor of London.
Khan has been pushing for more devolved powers in the wake of the EU referendum result, arguing that the capital needs more power over tax raising and spending.