PayPal president Scott Thompson has been appointed to the position, taking effect January 9.
"Scott brings to Yahoo! a proven record of building on a solid foundation of existing assets and resources to reignite innovation and drive growth, precisely the formula we need at Yahoo!," chairman of the Yahoo! board Roy Bostock said January 4 (local time).
"His deep understanding of online businesses combined with his team building and operational capabilities will restore the energy, focus, and momentum necessary to grow the core business and deliver increased value for our shareholders."
Thompson replaces interim CEO Tim Morse, who is set to resume his role as chief financial officer for the search engine.
"I'm thrilled to become part of an amazing group of people who I suspect are as eager as I am to deliver Yahoo's next era of growth and return the company to a path of industry-leading innovation," Thompson said.
"I cannot wait to get started on this."
Bartz's departure received much criticism, after she was reportedly fired over the phone.
According to business website Bloomberg, Bartz reduced costs and formed a search partnership with Microsoft Corp in her time as CEO – which amounted to less than three years.
"During the second quarter, Bartz’s last full three-month period as CEO, Yahoo reported revenue that fell short of estimates as her overhaul of the US sales force made it harder to close deals and slowed growth in display advertising," Bloomberg reported.
The news comes as Yahoo prepares to release its fourth-quarter earnings on January 24.