Obama is scheduled to announce the appointment at 12:10 p.m. in the East Room at the White House, USA Today reported.
McDonough, 43, who has worked with Obama on foreign policy issues since his 2008 campaign, will replace Treasury Secretary-designate Jack Lew.
Obama will also announce the appointments of other executive staff members, including Rob Nabors as Deputy White House Chief of Staff for Policy, Tony Blinken as Deputy National Security Adviser, and Danielle Gray as Cabinet Secretary.
Notable deaths of 2014 [PHOTOS]
Five men escape jail near Fresno, Calif.