Jean-Pierre takes on the role as the White House faces an uphill battle to help Democrats hold onto the House and Senate in the country's midterm elections and as the administration struggles to address public concerns about soaring inflation and the state of the economy.
She is the first African-American woman and openly LGBTQ person to serve in the role.
Biden is also bringing back longtime Democratic strategist Anita Dunn as his senior adviser.
She had served in the White House last year for several months after Biden was sworn into office.
"Karine not only brings the experience, talent and integrity needed for this difficult job but she will continue to lead the way in communicating about the work of the Biden-Harris administration on behalf of the American people," Biden said in a statement praising Jean-Pierre, who has served as his principal deputy press secretary since Inauguration Day.
Psaki, who leaves the White House on May 13, praised her successor, noting the significance of the history-making appointment.
"Representation matters and she will give a voice to many, but also make many dream big about what is truly possible," Psaki said.
She said Biden offered the job to Jean-Pierre Thursday in the Oval Office.
When Jean-Pierre delivered her first press briefing last year, she told reporters, "it's a real honour to just be standing here today".
"I appreciate the historic nature, I really do," she said.
Before joining the Biden presidential campaign, Jean-Pierre was the chief public affairs officer of the progressive group MoveOn.org and a former political analyst for NBC and MSNBC.
She also worked in political affairs in the White House of former president Barack Obama and on his re-election campaign.
The press secretary is responsible for holding daily briefings with the news media and leading a department of more than a dozen staffers who help address queries from the press.
When she took the job, Psaki, who has two young children, said publicly she aimed to remain in the job for about a year.
She is expected to be joining MSNBC later this year.
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