If confirmed by the Senate, Krueger is expected to provide expertise on bringing down unemployment as the Obama administration seeks to boost the economy ahead of the 2012 election, the Associated Press says.
Goolsbee, the previous chairman of the White House Council of Economic Advisers, and one of Obama's longest-serving advisers, left earlier this month to return to his teaching post at the University of Chicago, Reuters reports.
Obama's announcement of Krueger as his choice for top economist rounds out the president's economic team, and comes a week ahead of a much-anticipated announcement on a new jobs initiative.
Obama is under mounting pressure to focus on jobs and the economy, and is to offer a jobs plan next week, Reuters says.
"As one of this country's leading economists, Alan has been a key voice on a vast array of economic issues for more than two decades," Obama said Monday in a statement, according to the Wall Street Journal.
"Alan understands the difficult challenges our country faces, and I have confidence that he will help us meet those challenges as one of the leaders on my economic team," he said.
Krueger previously served as assistant Treasury secretary for economic policy during the first two years of the Obama administration, and went through the Senate confirmation process for that job.
He also served as chief economist for the Department of Labor under Bill Clinton, and at Princeton was a regular contributor to the Economic Scene column in The New York Times.