Douglas Millican has been leading the public utility company on a temporary basis since predecessor Richard Ackroyd’s sudden death in October.
Mr Millican will be responsible for running Scottish Water as well as managing its £2.5 billion investment programme.
His appointment was a unanimous decision by the company’s board and has been approved by Scottish Ministers.
Mr Millican was formerly with East of Scotland Water and worked with Price Waterhouse in Edinburgh and New Zealand and with Tyco International in Australia.
He said: “I am honoured and delighted to take the helm at Scottish Water, leading a committed and passionate workforce delivering ever improving services to our customers.
The service we provide is an essential one, and I know everyone in Scottish Water will continue to do the very best we can to deliver for our customers and communities across Scotland.”
Chair of Scottish Water Ronnie Mercer said: “He is the obvious choice to lead Scottish Water to even more success and sustain the high performance of the business.”