She will take up the role having previously been the UK’s permanent representative to the United Nations.
Her appointment marks the first time a woman will hold the role.
The career diploma is renowned as a tough, hard-hitting envoy whom President Trump has praised as “fab”.
Boris Johnson hailed her as “an outstanding and accomplished diplomat”, adding: “I can think of no better person to drive forward our hugely important relationship with the United States at this time. I’m delighted she’ll be representing us in Washington.”
In the position she will swiftly be tasked with attempting to ease tensions between the UK and the US, due to a row over Boris Johnson’s decision to allow Huawei involvement in 5G operations.
This flew in the face of warnings from Washington and Donald Trump is reported to have been “apoplectic” with rage in a recent call with the prime minister.
Dame Karen previously showed her mettle after the Russian novichok poisoning scandal when she lambasted the Kremlin in public at the United Nations, where she has been permanent representative since 2018.
As ambassador she will be the key voice of Britain in Washington, a role that has been empty since the resignation last year of Lord Darroch following the leak of a diplomatic memo that offended the Trump administration.
She has served in numerous prestigious postings including Tokyo, Geneva and the Balkans and was the UK’s ambassador to Afghanistan in 2015 and 2016. She was once tipped as a head of MI6.
Asked whether Dame Karen would be tasked with repairing relations with the US, a No 10 spokesman said: “The UK has an excellent relationship with the United States and I think Dame Karen’s ability as a diplomat is proven by her career.”
Dame Karen spoke of her honour to take on the role.
In a statement, she said: “I am honoured to have been asked to represent the UK in the US.
“I think it is the UK’s single most important relationship. There is a deep bond between Britain and the US, built on many pillars.”
Foreign Secretary Dominic Raab said: “It is a time of huge opportunity for the friendship between the UK and US and I am delighted that Karen Pierce will take forward this exciting new chapter in our relationship.
“We’re proud to be sending to Washington such an outstanding diplomat.”
Sir Kim stood down in the midst of controversy last year when cables he wrote criticising the Trump White House were leaked to the press.