The bearded, hardline commander, who is regarded as an idol by many Chechens, will replace Aslan Maskhadov, whom Russia has long regarded as one of the less extreme Chechen leaders, and who is capable of negotiating a peace deal.
Mr Maskhadov's future role in the leadership, which has been reshuffled following the death of Dzhokhar Dudayev, is not clear.
The news will not please President Boris Yeltsin who has vowed to end the Chechen war, in which more than 30,000 people have died, before this June's presidential election. Despite his announcement of a ceasefire on 31 March, the conflict has continued.
It followed a series of confusing reports yesterday saying that Dudayev's replacement, Zelimkhan Yandarbiyev, had been killed during a shoot-out after only a week in office.
The reports fuelled theories, encouraged by the Russians, that the Chechen leadership is in the grips of a "razborka", or internal feud, despite its outwardly unified front.
The reports were denied by Doku Makhayev, a senior Chechen commander in south-west Chechnya. He said Mr Yandarbiyev was alive.
A spokesman for the Federal Security Service, the successor to the KGB, told Interfax news agency it was not Mr Yandarbiyev who died, but his nephew.