He also said his proposed new team will help put in place new rules to help "crack down on the culture of greed and scheming".
Critics have said deregulation of the US financial industry was partly responsible for recent global financial turmoil.
Schapiro is currently chief executive of the Financial Industry Regulatory Authority, a self-regulatory body for the securities industry.
She was an SEC commissioner for six years, then became chairwoman of the Commodity Futures Trading Commission in 1994 during the Clinton administration.
Tarullo, a law professor at Georgetown University in Washington DC, would, if confirmed by the senate, fill one of two vacancies on the US central bank's seven-member policymaking board.
Ben Bernanke, the current chairman of the Federal Reserve, ends his four-year term in January 2010 and at present his future under the upcoming Obama administration remains uncertain.
Tarullo's nomination could spark speculation that the new president wants his own man in charge, with his new top economic adviser Larry Summers, former treasury secretary, reported to be a contender for the position.
"I have no doubt that his knowledge, experience, and independence will make him a valuable addition to the Federal Reserve at this critical time," Obama said of Tarullo on Thursday, promising a "21st century regulatory framework" after years of deregulation.
On Wednesday, Obama said the Federal Reserve was "running out of the traditional ammunition" to combat a recession as it cut US rates to almost zero and urged swift action by Congress on an additional economic stimulus plan.