It is the latest move in a rolling reshuffle of senior ruling family members over the past two years.
He replaces Prince Khaled al Faisal, who has been made education minister, a move that may revive stalled educational reforms aimed at reducing the influence of religious conservatives, Saudi analysts said.
The appointments were announced in a royal decree carried by state media, where moves among senior princes are closely watched for their impact on the country's opaque succession process.
Since 2011, a series of deaths, retirements and promotions mean most top government positions held by princes, plus the three top provincial governor jobs, have switched hands after decades with little change.
Analysts have said the changes reflect a desire by King Abdullah, who is thought to be 90, to establish his sons and other allies in key positions for the future.