De Soto, who succeeds Terje Roed-Larsen in the post, will act as Annan's envoy to the Quartet for Middle East Peace, as well as his personal representative to the Palestine Liberation Organisation and the Palestinian Authority, the UN said in a statement on Friday.
De Soto, whose position as Special Coordinator for the Middle East Peace Process becomes effective immediately, will attend a quartet meeting in Moscow on 9 May.
"The appointment of a new Middle East envoy comes at a time of renewed momentum for peace that must be sustained by the parties and strongly supported by the international community," UN spokesman Fred Eckhart said.
"The Special Coordinator will be guided by the principles of the relevant Security Council resolutions on the Middle East and by the road map for peace put forward by the quartet."
Russia, UN, EU and the US make up for the quartet.
De Soto has served previously in special representative positions for the UN in Western Sahara, Cyprus and Myanmar.