Koizumi, who has said he will step down at the end of his term next September, named right-leaning Shinzo Abe as his top government spokesman, and Public Management Minister Taro Aso as foreign minister on Monday.
The popular prime minister had been expected to put his favourites for next premier in leading positions. He also was expected to favour supporters of his reform agenda, including the privatisation of the postal service.
"This is a cabinet to actually implement the reforms," Abe, in his new position, said in announcing the list of ministers.
Koizumi's ruling Liberal Democratic Party won a landslide victory in 11 September elections, but the cabinet reshuffling was postponed to allow parliamentary passage of the privatisation bills, a Koizumi pet project.
The cabinet line-up reflected the prime minister's aims: a conservative, more assertive foreign policy, and a steady financial policy as the economy is making a firm recovery from more than a decade of sluggish performance.
Towards that end, Koizumi retained Heizo Takenaka, the main architect of the postal plan, as his top economics minister, and kept Sadakazu Tanigaki as finance minister.
Shinzo Abe has been named
top government spokesman
Abe, deputy secretary-general of the LDP, has favoured a hard line with North Korea, and has championed the cause of Japanese citizens kidnapped by the communist government in the 1970s and '80s.
Often named as a possible successor to Koizumi, Abe also favours visits to a Tokyo war shrine that Japan's neighbours consider a glorification of the country's wartime past.
Another conservative, Aso was formerly Koizumi's top policy planning chief and has previously served in the cabinet as economy minister.
A grandson of the late Prime Minister Shigeru Yoshida, Aso is also considered a possible Koizumi successor.