California's senior senator was tapped for the key post as expected Monday by Senate Majority Leader Harry Reid.
Feinstein, a Democrat, will replace Sen. John Rockefeller of West Virginia, who was tapped to lead the Commerce Committee.
"This is a critical task at a critical time in our nation's history," Feinstein said in a statement. "With the United States fighting two wars, and facing multiple threats around the globe, it's essential to the nation that our intelligence agencies gather reliable information, and do so in a manner that comports with our laws and our national values."
Serving on the Intelligence Committee for the past eight years, Feinstein has played a key role in crafting some important legislation including the creation of the post of director of national intelligence following the Sept. 11 terror attacks.
Monday's appointment will put both of California's senators in charge of high-profile committees on Capitol Hill, with Democrat Sen. Barbara Boxer chairing the Environment and Public Works Committee.
For the past two years, Feinstein chaired the lower-profile Rules and Administration Committee, which oversees Senate procedures and federal voting issues.
She's also considered running for California governor in 2010, though gaining the plum chairmanship could put that more in doubt. Feinstein has said she won't decide on the gubernatorial bid until next year, and her spokesman Gil Duran said Monday that hasn't changed.
Reid's recommendations to the Senate Democratic Steering committee will be formally approved when the 111th session of the Senate convenes in January.