Shanahan is a senior vice president at Boeing, where he is responsible for oversight of the company's manufacturing operations and supplier management functions, the White House said in statement.
Boeing is a major defense contractor and supplies the military with many big-ticket items, including the F/A-18 Super Hornet, Apache helicopter gunships, Chinooks and Air Force One, which currently is in the early phases replacement and which Trump has said is too expensive.
Defense Secretary Jim Mattis was Trump's first cabinet pick to win Senate confirmation but other "political" positions in the Pentagon have gone unfilled.
The White House announced five other intended nominees at the same time as Shanahan, and the Pentagon said all are "highly qualified individuals who were personally recommended by Secretary Mattis to the president for nomination."
Shanahan was previously vice president and general manager of Boeing Missile Defense Systems and vice president and general manager for Rotorcraft Systems in Philadelphia.
If confirmed by the Senate, Shanahan would replace Robert Work, who has remained in his role in a temporary capacity since Barack Obama left office.
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