Selig, who has announced he will step down in January 2015 when his current term expires, said Manfred's appointment is part of a front office reorganization meant to "facilitate an orderly transition" with his departure.
The Los Angeles Times reported the move signals Manfred's status as the top candidate to replace Selig, 79, who has run the organization since 1992.
"I have the utmost confidence in Rob to excel at his expanded duties and to help the industry maintain its extraordinary growth and vitality," the commissioner said.
"Rob has tremendous institutional knowledge and first-hand experience with many of our most complex matters, including labor, revenue sharing, competitive balance and the most comprehensive drug program in American professional sports."
In his new role, the 55-year-old Manfred -- who has been in charge of collective bargaining agreements as MLB's executive vice president for labor relations -- will now oversee day-to-day management of the commissioner's office in New York.
"I thank Commissioner Selig for placing his faith in me," he said. "The opportunity to serve the clubs in this new position is a distinct honor."
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