Keith Ireland will replace chief executive Simon Warren who stepped down from the authority following months of ill health.
On Wednesday the council agreed to abolish the post of chief executive and replace it with a MD.
The move is understood to save taxpayers £195,000 a year as part of a £350,000 saving target on senior management.
Mr Ireland said: "I am passionate about the city of Wolverhampton and I am tremendously proud at being offered the post of managing director and look forward to working with the leader, councillors, colleagues and stakeholders to deliver the huge agenda ahead of us."
The new managing director will continue to oversee the running of the delivery directorate but will also assume additional responsibilities working with the West Midlands councils to on transport and other regional activity.
Keith Ireland has worked at Wolverhampton City Council for two and a half years.
He had previously held senior management and director roles at the London Borough of Enfield, Northumberland County Council and Manchester City Council.