He will take up the post on 20 July 2007, succeeding John Tiner who steps down at the Annual Public Meeting on 19 July.
Hector Sants is currently managing director of wholesale and institutional markets at the FSA, which he joined in May 2004.
Callum McCarthy, chairman of the FSA, said: "I am delighted that Hector has emerged as the clear choice from a strong field of internal and external candidates. We conducted a very thorough search, and we believe Hector's combination of financial services industry experience, intellectual engagement and leadership skills best equips him to lead the FSA."
Hector Sants said: "I am privileged to have the opportunity to take the FSA through the next phase of its development. John Tiner and his senior management team have laid out a clear path for the future of the organisation. I plan to continue that agenda, ensuring that the FSA itself - and crucially its people - are well-equipped to deal with the complex and constantly changing financial services industry.
"I firmly believe in the risk-based and more principles-based approach the FSA has pioneered and I will work with the industry to ensure that market solutions deliver the best outcomes for all stakeholders, with a particular focus on consumers."
