The appointments fill a leadership vacuum after former CEO Oswald Gruebel quit the Swiss bank in September following a $2BN rogue trading scandal.
At the same time, UBS said its current board backed the bank's strategy, which will be detailed on Thursday at an annual investor event in New York.
"This strategy will be centred on our leading wealth management businesses and our position as the strongest universal bank in Switzerland," Ermotti, a 51-year-old Swiss, said in a statement.
"A focussed, less complex and less capital-intensive Investment Bank and our asset management business are also key elements for growing our wealth management franchise."
The appointment represents a rapid ascent for Ermotti, a former UniCredit deputy boss who joined UBS in April.
Ermotti's most urgent priority is to restore trust following the trading scandal and to scale back the investment bank amid a glut of new capital rules for riskier activities.
Ermotti's appointment, which can be interpreted as a nod to Swiss domestic interests, is an attempt to signal continuity and stability at UBS.
"The nomination of Mr. Weber as chairman of the board and the appointment of Mr. Ermotti as group CEO will bring essential stability and clarity to UBS," current chairman Kaspar Villiger said in a statement.
Ermotti's first major task will be to present UBS's new strategy to investors on Thursday when he is widely expected to curb UBS's investment bank, particularly fixed-income activities which soak up large sums of capital.
UBS did not disclose any detail of the strategy, saying only Ermotti and management are authorised to implement it with "utmost stringency and diligence."