Noda, who will be the sixth prime minister in five years, defeated front-runner Industry Minister Banri Kaieda in a runoff in the party presidential election, Kyodo News reported. The party president normally becomes the prime minister.
Noda will succeed Naoto Kan, incumbent party chief and prime minister, who resigned Friday under criticism of his government's handling of the nuclear crisis and other disasters set off by the March 11 earthquake and tsunami.
Kyodo reported Kaieda, 62, backed by the party's powerful Ichiro Ozawa and his allies, won the votes of 143 of the 398 party lawmakers to Noda's 102 votes in the initial round, forcing a runoff between the two out of the total of five contenders.
In the runoff, Noda, finance minister since June of last year, won 215 votes to Kaieda's 177, The Wall Street Journal reported.
The Journal said Noda is seen as a steady fiscal conservative.
Until his election, Noda has been dealing with the sharp jump in the value of yen against the U.S. dollar and other hard currencies, which has been hurting exporters because a higher yen makes their goods costlier.
Japan's economy suffered hundreds of billions of dollars in damage in the March 11 disaster and it needs to sharply boost exports to sustain its weak economic recovery.
The Journal reported Noda was able to pick up support in the runoff from the eliminated candidates, former Foreign Minister Seiji Maehara, Agriculture Minister Michihiko Kano and former Transport Minister Sumio Mabuchi.
The report said Noda, on funding finance quake reconstruction, has been calling for tax increases.
Prior to the election, the Japanese government announced various responses the next administration could adopt to tackle the rising yen against the U.S. dollar.
The suggestions include financial assistance to exporters affected by the yen rise, and encouraging Japanese businesses to sell the yen for U.S. dollars and other major currencies for investments overseas.