He will take up the role on January 1 and replaces Neil Coles, who is to step down after 38 years in the post.
A European Tour statement said of Williams: "David brings considerable commercial experience to The PGA European Tour having led a wide range of public and private businesses over the last 35 years both as CEO and as chair."
Williams said: "To follow in the footsteps of someone who has been as much of a figurehead as Neil Coles is a tremendous honour.
"The European Tour brand is strong and I will work with [chief executive] George O'Grady, his team, the players and the board to take the organisation forward."
Paul McGinley, the European Ryder Cup captain, welcomed the appointment. "In my role as a member of the players' committee and, indeed, as Ryder Cup captain I have seen at first hand the importance of the commercial aspect of golf and how it needs to work hand in hand with the playing side. In our new chairman we have someone who will bring these two elements together."