Mlambo-Ngcuka, 49, becomes the highest-ranking woman in South Africa's government after playing a key role in developing the country's Black Economic Empowerment strategy designed to give blacks a greater share in the post-apartheid economy.
"As you know we have to appoint a new deputy president and therefore we have appointed the minister of minerals and energy as our new deputy," Mbeki told a Cape Town news conference on Wednesday that was broadcast live on national television.
Mbeki appointed Deputy Minister of Trade and Industry Lindiwe Hendricks to take over the important minerals and energy portfolio.
"We thought that this gave us an opportunity further to strengthen the participation of women in the executive," Mbeki said.
Mlambo-Ngcuka was seen as a leading contender to replace Zuma, a popular politician who was long regarded as Mbeki's heir-apparent but was dismissed for being implicated in a graft case involving his financial adviser.
Meanwhile, Zuma's dismissal has sparked internal pressures within the African National Congress, where the former deputy continues to have strong support among the rank-and-file.
"We thought that this gave us an opportunity further to strengthen the participation of women in the executive"
South African president
Mlambo-Ngcuka is married to former chief prosecutor Bulelani Ngcuka, who launched the case against Zuma when he announced in 2003 that there was a "prima facie" corruption case against the deputy president.
Ngcuka did not bring charges at the time, saying the case would be unwinnable in court.
But following the conviction of former Zuma financial adviser Schabir Shaik this month, prosecutors announced they would be bringing formal charges against Zuma.