Trump signed the reorganization memorandum Saturday.
The council is a panel of officials, most of them Cabinet level, who work with the president to determine the best course of action on security issues.
Trump also pared the council to six deputy national security advisers, compared to the 23 on Obama's council.
White House Press Secretary Sean Spicer said Bannon's experience as "a former naval officer" offers knowledge and experience, and suggested the benefit of the president having his top strategist in national security council meetings would be a positive for Trump.
Bannon's "got a tremendous understanding of the world and the geopolitical landscape that we have now," Spicer said. "Having the chief strategist for the president in those meetings, who has a significant military background, to help make, guide what the president's final analysis is going to be is crucial."
Previously, political operatives have been kept away from the National Security Council over concern that political pettiness would interfere with decisions about safety and security. President George W. Bush barred his chief strategist and top adviser Karl Rove from the meetings, telling him he could "never" attend one.
"It wasn't because he didn't respect Karl's advice or didn't value his input," said Josh Bolten, Bush's former chief of staff. "But the president also knew that the signal he wanted to send to the rest of his administration, the signal he wanted to send to the public, and the signal he especially wanted to send to the military is that the decisions I'm making that involve life and death for the people in uniform will not be tainted by any political decisions."
Editor's note: An earlier version of this article indicated the Director of National Intelligence and Joint Chiefs of Staff were completely removed from the National Security Council. In fact, the two shall attend meetings if they so choose based upon if topics up for discussion affect their respective agencies, as was the case in past administrations.