Steve Rotheram will be Labour's candidate in next year's Liverpool City Region mayoral election.
The Liverpool Walton MP beat the city's elected mayor Joe Anderson and fellow Merseyside MP Luciana Berger in a vote of Labour members in the region.
Mr Rotheram is the Parliamentary Private Secretary to Jeremy Corbyn and a close ally of the Labour leader.
His friend and fellow MP Andy Burnham won the Manchester mayoral nomination for Labour on Tuesday.
The Liverpool City Region comprises the city and St Helens, Knowsley, Sefton, Wirral and Halton in Cheshire.
The other parties have yet to decide their candidates for the election, to be held on 4 May 2017.
Mr Rotheram, a former Lord Mayor of Liverpool, said: "I am extremely grateful to the thousands of party members who have chosen to place their trust in me and I am determined not to let them down."
Analysis by BBC political correspondent Carole Walker
Steve Rotheram's victory in Liverpool further strengthens Jeremy Corbyn's grip on the Labour Party.
He's a parliamentary aide to the Labour leader, who was one of the first to congratulate him.
Mr Rotheram won almost 60% of the vote in the second round to secure Labour's nomination.
Given Labour's grip on local politics, he's almost certain to become the first elected mayor of the Liverpool City Region, giving Mr Corbyn an important ally in a powerful devolved role.
Mr Rotheram also has impeccable credentials to lead a city fiercely proud of its own identity. Born in Knowsley, educated locally and a former city councillor, his local popularity helped him to turn his Liverpool Walton seat into the safest in the country at the last election.
He is also a die-hard Liverpool FC fan.
The 54-year-old said he had "travelled the length and breadth of our city region", speaking to people who shared his ambition to "build a city region that utilises the energy, the talents, the ideas and the hopes of all our people".
"I will put social justice at the heart of my administration; something which I've been passionate about all of my political career," he said.
"I'll stand up for ordinary people and be a real champion for Merseyside and Halton on the national and international stage.
"Devolution presents us with a unique opportunity to make decisions locally, in the interests of local people, to ensure each person within our six districts has the best chance in life."
At the scene: Claire Hamilton, BBC's political reporter for Merseyside
There were gasps from his supporters as Steve Rotheram was declared Labour's candidate for the Liverpool City Region Metro Mayor.
He vowed to reunite the party locally after what has been a prickly election campaign.
Mayor of Liverpool Joe Anderson had made no secret of his desire to be Metro Mayor - and lobbied hard for the role to be created in the first place. He will now remain as Mayor of Liverpool, after being re-elected for a second term in May.
There is a possibility that in February 2017, Liverpool city council could vote to abolish the role of city mayor, but that would require a two thirds voting majority by members of the council to change the system.
This would mean a return to the old system of Leader and Cabinet.
He added it was "right" that he had thrown his support behind Mr Corbyn despite backing Mr Burnham in Labour's leadership contest last year.
The MP said: "People will know that I didn't support Jeremy Corbyn - I supported my best mate, Andy Burnham, and I did everything I could to get Andy elected.
"When the result came out in September 2015, we got whacked, it was overwhelming the support for Jeremy and therefore it was right that people got behind the leader of the Labour Party. The most important thing in this has to be the Labour Party, we are all members."
Mr Corbyn said: "Congratulations to Steve Rotheram on being selected as Labour's candidate to take our message for social justice to the people of Merseyside.
"Steve is a tireless campaigner and advocate for the region, and as mayor would do everything possible to minimise the impact of Tory austerity."
Mr Anderson, who offered his "sincere congratulations" to Mr Rotheram, said he was "heartbroken" at the result.
His post as Liverpool's directly-elected mayor is unaffected by the new city region mayor system.
Turnout in the Labour poll was 72.8%.
Ms Berger dropped out after the first round of voting, which saw Mr Rotheram win 2,029 votes, Mr Anderson 1,641 and Ms Berger 1,202.
In the second round Mr Rotheram picked up 2,670 votes to Mr Anderson's 2,042 after Ms Berger's votes had been re-allocated.
Former bricklayer Mr Rotheram, who was elected to the Commons in 2010 after serving eight years as a Liverpool city councillor, pledged to work for a "North West Powerhouse" with Mr Burnham.
Mr Rotheram has been a prominent Hillsborough campaigner.
He attended the 1989 FA Cup semi-final in Sheffield and exchanged a ticket for the Leppings Lane terraces, where fans were fatally injured, for a seat in the stand 15 minutes before kick off.