Procter & Gamble Co
McDonald, a 29-year P&G veteran who currently serves as chief operating officer, was widely expected to win the top job, especially after another top-tier P&G executive, Susan Arnold, announced plans to retire in March.
Lafley, who turns 62 on June 13, joined P&G in 1977. He has been chairman since 2002 and CEO since 2000.
McDonald, who turns 56 on June 20, also becomes president and a member of the board. He joined the company in 1980 and became chief operating officer in July 2007. He is credited with trimming costs throughout P&G's operations.
The Wall Street Journal had reported the plan late on Monday, citing sources.
In the nine years since Lafley became CEO, P&G's shares have risen close to 90 percent.
(Reporting by Jessica Wohl; Editing by Lisa Von Ahn)