Vice Adm. Michael S. Rogers, a Chicago native currently commanding the Navy's operating force responsible for cyberwarfare programs, "would bring extraordinary and unique qualifications to this position as the agency continues its vital mission and implements President Obama's reforms," Hagel said in a statement announcing President Obama's nominee to run the signals intelligence surveillance agency and the U.S. Cyber Command.
The Cyber Command centralizes command of cyberspace operations, organizes existing cyber resources and synchronizes defense of U.S. military networks.
If confirmed by the Senate, Rogers would succeed Gen. Keith Alexander as NSA director.
Alexander, who has headed the NSA since 2005 and the U.S. Cyber Command since 2010, announced last year he would retire in March.
Rogers' Senate hearings are expected to start next month.
The U.S. Fleet Cyber Command, which Rogers currently runs, is the naval component of the U.S. Cyber Command.
"I am also confident that Admiral Rogers has the wisdom to help balance the demands of security, privacy and liberty in our digital age," Hagel said in a statement.
"This is a critical time for the NSA," he said.
The person Obama selected to be the NSA's No. 2 person is Rick Ledgett, Hagel said.
Ledgett currently serves as chief of the NSA response unit handling the fallout from the leaks by former agency contractor Edward Snowden.
Ledgett's appointment as NSA deputy director doesn't require Senate confirmation.
Ledgett told the CBS News program "60 Minutes" in mid-December he thought it was "worth having a conversation" about giving Snowden amnesty from prosecution in return for a full accounting of what he took from the NSA's Hawaii office and where the remaining, unpublished data are.
The White House immediately rejected the idea of an amnesty, but Attorney General Eric Holder said last week he would be open to talking about some kind of deal for Snowden, short of amnesty, if he returned from Russia.
Obama was expected to follow Hagel's statement with a formal nomination announcement about Rogers and Ledgett Friday.
"The president believes Admiral Rogers and Rick Ledgett are the right people to provide experienced and principled leadership for the NSA moving forward," including putting into effect NSA reforms Obama outlined Jan. 17, White House National Security Council spokeswoman Caitlin Hayden said.
Those reforms include placing new curbs on the NSA's phone-data collection program.