The man who helped bring independence to East Timor will also head up the United Nations Integrated Peacebuilding Office (UNIOGBIS) in Guinea-Bissau.
Ramos-Horta (63) brings with him more than three decades of a diplomatic and political career in the service of peace and stability in Timor-Leste and beyond, a UN statement as quoted by AFP.
He replaces Rwandan diplomat Joseph Mutaboba, whose term in the troubled west African nation ends on January 31. Mutaboba, appointed in 2009, left the country in early December.
Guinea-Bissau demanded he be replaced, accusing Mutaboba of favoring the government that lost power in an April coup that interrupted a presidential election. An interim civilian administration plans to hold elections in 2013.
Guinea-Bissau has suffered chronic instability due to conflict between the army and state since independence from Portugal in 1974.
Ramos-Horta, an exiled voice for East Timor during two decades of often brutal Indonesian occupation, advocated clemency for Indonesians accused of atrocities as well as renegade troops who tried to assassinate him in 2008.
He has since been active on international peace initiatives. Ramos-Horta shared the 1996 Nobel Peace Prize with East Timorese Bishop Carlos Filipe Ximenes Belo.
He was nominated to the UN post just as the UN ends its peacekeeping mission in East Timor on Monday -- after 13 years in Asia`s youngest nation following a bloody transition to independence.