Aso, 68, a former foreign minister and grandson of a prominent prime minister, received 351 of the 525 votes cast in the Liberal Democratic Party ballot. His triumph over four rivals had been widely expected.
The former Olympic skeetshooter immediately vowed to rejuvenate his troubled party and lead it to victory in as-yet-unscheduled elections in the powerful lower house of parliament.
"Who else but our party can achieve policies in order to address the public’s concerns?" Aso said at LDP headquarters. "I am committed to winning the elections and take a further step to achieve economic recovery and pursue reforms."
Aso, a sharp-tongued conservative who favors the alliance with the U.S. and a diplomatically assertive Japan, backs government spending to revive the flagging economy and has said he would not raise the consumption tax anytime soon.
Aso is all but guaranteed to be elected prime minister in the LDP-dominated parliament on Wednesday, making him the third leader Japan has had since September 2006 - and the first Roman Catholic to hold the job.
Outgoing Prime Minister Yasuo Fukuda threw the political world into disarray three weeks ago when he abruptly announced he would step down after only a year in office, weary of battling with a divided parliament.
The LDP runs the lower house, but the opposition took control of the upper house in elections last year, and has repeatedly embarrassed his government by blocking or delaying high-profile legislation.
The next prime minister will face mounting pressure to renew the LDP’s mandate by calling early lower house elections - possibly as soon as next month.
The opposition immediately renewed its attacks, arguing the LDP has no right to govern until it proves it has public support.
"If he wants to be prime minister, he should wait until voters decide who should head the country in the general elections," Naoto Kan, a leader of the opposition Democratic Party of Japan, told TBS television.
The turmoil at the top is raising worries about how the country will handle its economic troubles. Inflation is up and growth has stalled, effectively ending a lengthy period of expansion. The financial meltdown in the United States, a leading market for Japanese autos, electronics and other vital exports, has intensified the fear.