Mojtaba, 56, a mid-ranking cleric with influence inside Iran's security forces and vast business networks under his father, had been seen as a frontrunner in the lead up to the vote by the assembly, a body of 88 clerics charged with choosing the new leader after Ali Khamenei.
"By a decisive vote, the Assembly of Experts, appointed Ayatollah Seyyed Mojtaba Hosseini Khamenei as the third Leader of the sacred system of the Islamic Republic of Iran," the assembly said in a statement issued just after midnight Tehran time.
The position gives Mojtaba the final say in all matters of state in the Islamic Republic.
Mojtaba's appointment will likely draw the ire of US President Donald Trump, who said on Sunday that Washington should have a say in the selection.
"If he doesn't get approval from us, he's not going to last long," he told ABC News.
Israel, ahead of the announcement, threatened to target whoever was chosen.
Mojtaba's father, Supreme Leader Ali Khamenei, and his wife were killed in one of the first strikes launched against Iran more than a week ago.
The US military on Sunday reported a seventh American had died from wounds sustained during Iran's initial counter-attack a week ago, a day after Trump presided over the return to the US of the remains of the six others who died.
The US-Israeli attacks have killed at least 1332 Iranian civilians and wounded thousands, according to Iran's UN ambassador.
As Trump pressed for an "unconditional surrender", Mohammad Bagher Qalibaf, Iran's parliament speaker, said Tehran was not seeking a ceasefire to the war and would punish aggressors.
Israel continued to target senior Iranian figures, including Abolqasem Babaian, the recently appointed head of the military office of the supreme leader, saying he was killed in a Saturday strike.
As fighting escalated on day nine of the US-Israeli campaign against Iran, thick black smoke hung over Tehran on Sunday, residents said, after strikes on oil storage facilities had lit up the night sky with plumes of orange flame.
Iran's foreign ministry spokesperson Esmaeil Baghaei said the large-scale attack marked a "dangerous new phase" of the conflict and amounted to a war crime.
"By targeting fuel depots, the aggressors are releasing hazardous materials and toxic substances into the air," he wrote on X.
Israeli military spokesman Lieutenant Colonel Nadav Shoshani told reporters the depots were used to fuel Iran's war effort, including producing or storing propellant for ballistic missiles.
"They are a legal military target," he said.
Israeli Prime Minister Benjamin Netanyahu said his government would press on with the assault and strike Iran's rulers "without mercy".
"We have an organised plan with many surprises to destabilise the regime and enable change," he said in a video statement.
US special envoy Steve Witkoff and Trump's son-in-law Jared Kushner will visit Israel on Tuesday, according to Axios, citing a senior US official.
Trump told reporters on Air Force One that he was not seeking negotiations to end the conflict, which has driven up global energy prices, disrupted business and snarled air travel.
"At some point, I don't think there will be anybody left maybe to say, 'We surrender'," he said.
