Alok Sharma is to leave his position as business secretary to focus full-time on his role as president of the UN COP26 climate conference in November.
The Glasgow event is expected to be the biggest summit the UK has ever hosted.
Mr Sharma, who will remain in the cabinet, said he was "delighted to have been asked by the PM to dedicate all my energies" to the position.
Kwasi Kwarteng replaces him as business secretary while Anne-Marie Trevelyan becomes the new energy minister.
The government says a successful summit will be critical if the UK wants to meet the objectives set out by the Paris Agreement and reduce global emissions.
The event had originally been scheduled for November 2020 but was delayed by a year due to Covid-19.
The BBC's political correspondent Jessica Parker said the decision to move Alok Sharma wasn't a surprise and would be seen as a recognition of the need to free him up to do more of the crucial diplomatic leg-work required.
Some MPs had previously warned that Mr Sharma lacked the "bandwidth" to head the conference alongside his cabinet job, especially given the strains on business due to the pandemic.
In his new role, which is based in the Cabinet Office, Mr Sharma's will remain a member of Boris Johnson's top team but be focused solely on coordinating global action to tackle climate change
Boris Johnson chose Mr Sharma to head the event after ex-minister Claire O'Neill was ousted from the position in the summer of 2019.
She later condemned what she called broken promises and backsliding on climate commitments.
Former Conservative PM David Cameron turned down the chance to head the conference and ex-Foreign Secretary Lord Hague was also involved in discussions.
Mr Sharma's move will be welcomed by climate campaigners, who worried he was over-stretched running a frantically busy department while also orchestrating the most important climate meeting on Earth.
Many of these summits - known as COPs - yielded little because the leadership was poor.
The French produced a triumphant agreement in the 2015 Paris COP after mustering the mighty force of French diplomacy.
Mr Sharma is reported to accept that he now needs to concentrate full time on the challenge.
He will need subtle diplomatic skills, a mastery of detail and the stamina of an ox as he attempts to corral world leaders into agreement on curbing emissions faster. He'll also need 100% support from the PM.
The greatest obstacle to action - Donald Trump - will soon disappear from the scene, and with China making bold promises, the COP has potential.
But politicians have been so slow to act that some key tipping points in the climate might already have been breached.
Reflecting on his new role, Mr Sharma said: "The biggest challenge of our time is climate change and we need to work together to deliver a cleaner, greener world and build back better for present and future generations.
"Through the UK's Presidency of COP26 we have a unique opportunity, working with friends and partners around the world, to deliver on this goal."
Richard Black, senior associate at the Energy and Climate Intelligence Unit (ECIU) said: "Allowing Alok Sharma to focus full-time on his COP26 role is a sensible decision, not least as it signals the government's commitment to ensuring that the summit is a success.
"With the election of Joe Biden as the next US President and China's recent carbon neutrality pledge, the diplomatic opportunities have opened up for more ambitious action on climate change. Mr Sharma's job will be to seize them."
And ex-cabinet minister Amber Rudd, who led the UK delegation at the Paris climate change conference, said the move showed the government "recognises the importance and opportunity for a global agreement this year".
Responding to his new appointment, Mr Kwarteng said he was "thrilled" and pledged to help businesses through this period of "extremely challenging circumstances".
The Spelthorne MP, who entered Parliament in 2010, has been energy minister since July 2019.
Labour's shadow business secretary Ed Miliband said Mr Kwarteng had "a massive task" in providing business with "a plan to help them through this year, not the inadequate sticking plaster measures we have seen".
He welcomed the decision to make Mr Sharma's COP role full time.
"It's absolutely crucial that the full political, diplomatic and strategic resources of government are now directed to the most ambitious outcome at Glasgow, which is a 1.5 degree deal."