"We chose His Royal Highness Prince Nayef bin Abdulaziz as crown prince," said the statement, read on state television and carried on the kingdom's news agency SPA soon after midnight.
It said Nayef, who is in his 70s, was appointed after King Abdullah took his choice to a royal family body called the Allegiance Council, set up in 2006 to make the process of succession in the conservative Islamic nation smoother and more orderly.
It was the first time the council had been involved in the appointment of a new crown prince, a move that analysts had said would help to regulate an opaque system of succession.
Crown Prince Sultan died of colon cancer in New York almost a week ago. He was also the kingdom's defence and aviation minister for nearly five decades. No replacements for these positions have yet been appointed.
At stake is the stability of a key US ally, whose ruling al-Saud family wields great influence over Sunni Muslims through its guardianship of Islam's holiest sites in Mecca and Medina.
Just over a century ago, King Abdulaziz Ibn Saud recaptured the family's historical stronghold of Riyadh from a rival clan, setting his family on a path of conquest from the Red Sea to the Gulf that eventually made the sleepy oasis town the capital of the world's foremost oil power.
As interior minister since 1975, a post to which he was reappointed in the Royal Court statement, Nayef has developed a reputation as a conservative with close ties to the Saudi religious establishment.
Nayef is sometimes portrayed as putting the brakes on the King Abdullah's cautious reforms which aim to reconcile the kingdom's conservative Islamic traditions with a youthful, increasingly outward looking population in the Middle East's largest economy.
Some 60 percent of Saudis are under the age of 30 and Internet penetration is 44 percent, according to internetworldstats.com.
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