The 65-year-old Biden is chairman of the Senate Foreign Relations Committee and a highly respected voice on international affairs.
He has twice sought the Democratic nomination for the White House and has served more than 30 years in the Senate.
Biden is expected to appear alongside the presidential candidate at a rally in Obama's state of Illinois at 3pm (20:00 GMT) on Saturday.
After appearing at the Old State Capitol in Springfield, where Obama launched his presidential campaign, they will tour some of the key battleground states, including Iowa and Montana.
Rob Reynolds, Al Jazeera's senior Washington correspondent, said that Biden complements Obama as he is strong in several areas where some voters perceive the Illinois senator is lacking.
"The campaign of Republican senator John McCain has been very critical of Barack Obama, pointing to a lack of experience they characterise him as a lightweight, someone who hasn't been steeped in policy issues, who doesn't have a great breadth of experience, especially in foreign policy," he said.
McCain's campaign said that the choice showed that OBama was not ready to serve as president himself.
"There has been no harsher critic of Barack Obama's lack of experience than Joe Biden," Ben Porritt, a spokesman for McCain's campaign said in a statement.
"Biden has denounced Barack Obama's poor foreign policy judgement and has strongly argued in his own words what Americans are quickly realising, that Barack Obama is not ready to be president."
Senior Republican officials say that McCain has not settled on a choice of vice-president, although Mitt Romney, former governor of Massachusetts and Tim Pawlenty, governor of Minnesota, were being considered.Challenge
Before naming Biden, Obama had told CBS' "Early Show" that he had decided on someone who will be prepared to step in as president, can help him govern and will be independent.
"I want somebody who is going to challenge my thinking and not simply be a yes person when it comes to policy-making," he said.
Toby Chaudhuri, a Democratic strategist, said that "the Obama-Biden ticket has a ring to it".
"There is a lot of electricity there, even though everybody will dice it up and think about which constituencies are going to be more likely to vote for the ticket now, at the end of the day it is about the chemistry between these two folks," he told Al Jazeera.
"When you add Biden to it, you add a populism to the ticket that may not have existed before, in addition to all the credibility that comes with his experience."
The move comes as the Democratic party is preparing for its annual convention in the city of Denver in Colorado next week, where both Obama and his vice-presidential choice are due to speak.