Elop replaces Pekka Kallasvuo, who will step down on 20 September.
Kallasvuo, a Nokia veteran and chief executive since 2006, has come under increasing pressure to quit this year as the company struggled to break into the competitive smart phone market.
Operating profit fell 31% to €295m (£249.5m) in the second quarter of the year.
Nokia has moved to boost its brand by bolstering its senior marketing team including bringing in Blackberry marketer Charmaine Eggberry as its senior vice president of marketing and agency executive Steven Overman to the role of vice president, global head of marketing creation.
Jorma Ollila, chairman of the Nokia board of directors, says in a statement that Elop, who currently heads Microsoft’s business division, has the “right industry experience and leadership skills to realise the full potential of Nokia”.
“The time is right to accelerate the company’s renewal; to bring in new executive leadership with different skills and strengths in order to drive company success,” he adds.
Yesterday (9 September), Nokia unveiled its latest effort to make inroads in the smart phone market with the launch of the N8, which will launch globally later this month.
Prior to Microsoft, Elop held a number of senior executive positions including stints at Juniper Networks, Adobe Systems. and Macromedia.