He faces a major challenge from ride-sharing firm Lyft and other non-U.S. -based firms like China's Didi Chuxing.
Khosrowshahi, 48, would take on the daunting task of leading Uber out of a almost year-long crisis.
Observers and those close to the matter were expecting Khosrowshahi, 48, to take up the job after the board of Uber unanimously voted in his favor. Uber and didn't immediately respond to requests for comment. The board had reportedly narrowed down its choices to Khosrowshahi and Meg Whitman, CEO at Hewlett Packard Enterprise, and chose the former, who has been the CEO at Expedia since 2005.
Khosrowshahi [pictured above] was the mysterious third candidate, who managed to dodge the leaks that have plagued the company and its board since Kalanick's resignation.
The company have yet to formally the announcement, but two people familiar with the unanimous decision have publicised the move. The board of directors and executives had instead been leaning toward Whitman.
As Uber's new CEO, Khosrowshahi will face a big job, including repairing the company's internal culture, navigating legal battles, and reducing its financial losses. Uber, which has garnered more than 12 billion euros from private investors, is moving towards an initial public offering.
Companies traditionally give new executives cash to make up for lost stock in situations like this.
While Uber's business continued to grow, Kalanick's management style faced scrutiny and investors mutinied against him.
"He is exactly the kind of leader Uber needs right now", said Henry Harteveldt, a travel industry analyst at Atmosphere Research who has followed Khosrowshahi's exploits.
Both Kalanick and Benchmark had their own preferred candidates for a new chief.
Benchmark wants Kalanick off the board of directors and sued him for fraud, breach of contract, and breach of fiduciary duty.
Running Uber will be no easy task. Before Expedia Khosrowshahi served as CEO of IAC Travel and, in addition, Khosrowshahi spent time at Allen & Company for seven years, becoming vice president from 1995 to 1998. Under his watch, Expedia gobbled up much of the competition as it sought to establish a stranglehold on travel and hotel bookings.
Despite its controversy, Uber is now maintaining a net worth of more than $70 billion. "When he was 13, Khosrowshahi's father traveled back to Iran to take care of his father and was detained for six years before he returned to the United States", writes April Glaser for Slate.