Nielsen served as White House chief of staff John Kelly's top aide during his time as Homeland Security secretary.
"I know you will fulfill your duties with dedication, determination and resolve".
Nielsen is an attorney who has experience in homeland security and cybersecurity, having served on the White House Homeland Security Council under President George W. Bush.
The Senate will need to confirm Nielsen's nomination.
At a formal White House event to announce the nomination, Trump spoke highly of Nielsen and her "sterling reputation as a dedicated leader whose number one priority was the security of our citizens, not politics or ideology".
Before joining the department earlier this year, Nielsen was a senior fellow at George Washington University's Center for Cyber and Homeland Security. She is the premiere candidate for the homeland security post who had benefited in the department according to the statement. Her supporters say she has been trying to help professionalize the White House.
"I think her credentials are being a little bit inflated", said the former official, who requested anonymity to speak candidly.
Added Frances Townsend, her boss at the White House during the Bush administration: "She is tough as nails, competent and has rightly earned the president's respect". Trump said Duke would remain at DHS as Nielsen's deputy.
Also considered for the job was House Homeland Security Chairman Michael McCaul of Texas. She was forced to clarify her claim last month that the federal response to Maria is "a good news story".
Neilsen is an expert in homeland and national security policy.