President Reuven Rivlin announced Sunday night he would task Blue and White chairman MK Benny Gantz with forming the government.
The announcement follows Rivlin's meetings with heads of the Knesset political parties Sunday.
Gantz received the recommendation of 61 MKs, a bare majority, while incumbent Prime Minister Binyamin Netanyahu received the recommendation of 58 MKs.
Gantz's Blue and White party received 33 Knesset seats in this month's elections, three less than Likud's 36.
The Blue and White chairman received the backing of the Joint Arab List, Labor-Meretz, and Yisrael Beytenu. The Joint Arab List is not expected to agree to join any coalition, but it may support a minority government from the outside.