Obama Communications Director Robert Gibbs has also been named Obama's White House press secretary, ABC News and Politico reported.
Obama would also like lawyer and confidante Valerie Jarrett, co-chairman of the Obama-Biden transition team, to play a key, yet undetermined role in his White House, ABC News reported.
They will join Rep. Rahm Emanuel, D-Ill., the No. 3 Democrat in the House, who accepted the job of White House chief of staff, Obama officials said Thursday.
Axelrod, 53, a former Chicago Tribune reporter, known as "Ax," built a national reputation as a campaign consultant, beginning with his work advising the late Paul Simon's successful Senate run in 1984, Crain's Chicago Business reported.
Clients have included Chicago Mayor Richard M. Daley and former President Bill Clinton.
No other national politician was able to lure Axelrod to Washington, the newspaper said.
Gibbs, 37, who has worked with Obama since 2004, was press secretary of John Kerry's 2004 presidential campaign and was criticized for his connection with a political group that launched attack ads against presidential candidate Howard Dean.
Jarrett, 51, born in Iran, where her father ran a hospital for poor children, is one of Obama's longest serving advisers and closest campaign aides.