Attorney-General Mark Dreyfus was confident Justice Mortimer would contribute significantly to the justice system, as he announced the appointment on Friday.
"She is widely recognised for her intellectual capacity and judicial leadership," he said.
Justice Mortimer will be the fifth chief justice of the Federal Court appointed since the court was established in 1976.
She was a member of the Victorian Bar and was made Senior Counsel in 2003.
Over her career she has been involved with many groundbreaking cases in the areas of migration, the environment and anti-discrimination.
In 2016, Justice Mortimer ruled the Queensland Police Service unlawfully discriminated in relation to the 2004 death of an Aboriginal Palm Island resident in custody.
She also presided over the native title agreement granted to Kaurna elders in Adelaide in 2018 - the first positive determination of native title over a capital city after the Native Title Act came into force.
Justice Mortimer has received a number of awards for her work, including the Australian Human Rights Commission Law Award and the 2011 Law Council of Australia President's Medal.
"She was awarded for her outstanding work that embodied the very best traits of the legal profession," the Law Council said on Friday.
Recently, she heard the workplace dispute between political activist Sally Rugg and independent MP Monique Ryan.
The appointment was welcomed by several law bodies - including the Australian Human Rights Commission and the Victorian Bar - who said she would be a model of inspiration for women.
"The chief justice is widely respected and known for her work ethic, fairness, her brilliant legal mind, and her humanity," Australian Women Lawyers president Astrid Haban-Beer told AAP.
"For women lawyers, it is wonderful to see. We hope this senior leadership appointment is echoed elsewhere in the legal profession."
She will begin her appointment on April 7, having served the Federal Court since 2013.
Mr Dreyfus thanked retiring Chief Justice James Allsop, who was head of the court since 2013.
Asked whether more women will be appointed to senior roles, Mr Dreyfus said they would do so on merit.
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