Putin made the announcement during a partly televised meeting with Kadyrov at his official residence in Novo-Ogaryovo, outside Moscow.
"I made this decision because you have done a lot for the reconstruction of Chechnya in recent years as [Chechen] deputy prime minister and prime minister," Putin said. "Chechnya has indeed made significant and noticeable steps forward in all areas."
Kadyrov, a 30-year-old former separatist fighter and son of assassinated Chechen President Akhmed-hadji Kadyrov, was appointed acting president of Chechnya following the resignation of Alu Alkhanov on February 15.
The republic's parliament is expected to vote on Kadyrov's candidacy on March 2.
"If we receive the trust of the People's Assembly of the Chechen Republic, we will do everything to ensure that the people, the citizens of our republic, live dignified lives -- just like others," Kadyrov said in thanking the president for the appointment.
Putin said he hopes Chechnya's parliament backs his choice, in order to help Kadyrov "make every effort in order that the social and economic rehabilitation of Chechnya continues at the same pace and the people feel safer."