Australia's 25th governor-general will be a woman Queensland Governor Quentin Bryce ending 107 years of tradition.
Prime Minister Kevin Rudd announced the appointment yesterday after seeking advice from two powerful women: the Queen and Deputy Prime Minister Julia Gillard.
Prominent lawyer, academic and women's activist Ms Bryce will replace Major-General Michael Jeffery as the Queen's representative in September.
Women's groups said Australia was finally moving into the 21st century, while Ms Bryce said her appointment showed women could aspire to anything.
Mr Rudd said it was time a woman held the job.
"It's taken us 107 years, it's been a while, it's good that it's happened."
But he laughed off questions about whether it was also time for a female prime minister.
"I think our arrangements at present are great. We've got a great Deputy Prime Minister and I've been chatting to Julia about this appointment as well."
Nor would he be drawn on whether Ms Bryce would be the last governor-general, with the republic debate back on the public agenda.
"The move to a republic is not a top-order question for the Government. There are many other priorities around," Mr Rudd said.
"The Government's commitment to a republic remains clear-cut ... and I'm sure that in the course of this year ... that the debate on our future constitutional arrangements will continue, as it should."
ACT Chief Minister Jon Stanhope described Ms Bryce's appointment as "fantastic, historic and quite thrilling". He considered Ms Bryce a friend, and got to know her when he was chief-of-staff to federal attorney-general Michael Lavarch and she was the federal sex discrimination commissioner.
"I'm particularly thrilled that not just a woman and someone with her background in discrimination and human rights, but somebody I know well and am particularly fond of and know as a friend, has been appointed governor-general."
Mr Stanhope said Ms Bryce would serve Australia well. "She's tremendous. She's got the common touch and she'll be a real adornment in the office of governor-general."
But despite his enthusiasm, he said the appointment would not end the republic debate. "The republic is coming it's just a question of when." Born near Longreach in Queensland, Ms Bryce has been Queensland's governor since 2003.
Asked if he had appointed her because she was, like him, a Queenslander, Mr Rudd replied he didn't actually know Ms Bryce well.
Ms Bryce said yesterday the new appointment was "a great honour and a great responsibility".
It was also "a great day for Australian woman".
"I grew up in a little bush town in Queensland of 200 people and what this day says to Australian women and Australian girls is that you can do anything, you can be anything, and it makes my heart sing to see women in so many diverse roles across our country in Australia," she said.
The 65-year old is married to graphic designer Michael Bryce, who created one of Australia's most successful logos: the Opera House-shaped squiggle that helped Sydney win its Olympic 2000 bid.
They have two daughters, three sons and five grandchildren.
General Jeffery welcomed the appointment, saying it was a singular honour to serve in the role.
He and his wife, Marlena, will continue to occupy Government House until Ms Bryce takes office on September 5.
Mr Rudd said General Jeffery had served for five years with "great distinction".
Ms Bryce has been appointed at the Queen's pleasure, although a five-year term is considered usual.
Opposition Leader Brendan Nelson said Ms Bryce would serve her country with distinction. with AAP