It represents a significant promotion for the 41-year-old, a trusted ally whose former job as chief whip involved enforcing discipline for May's Conservative party in parliament.
Williamson, who was only elected to parliament in 2010, is best known for having a pet tarantula, Cronus, that he keeps in a glass-sided tank on his desk.
"The Queen has been pleased to approve the appointment of Right Honourable Gavin Williamson as Secretary of State for Defence," Downing Street said in a statement.
The job is one of the biggest in the British government, and one of the most challenging.
Britain, a member of the NATO military alliance, spends two percent of its gross domestic product (GDP) on defence but the armed forces are facing constant pressure to cut costs.
Fallon announced his resignation late Wednesday, the first casualty of a deepening scandal over sexual harassment at Westminster.
He had apologised earlier in the week for touching a journalist's knee in 2002, but reports suggest there were other allegations which had not yet been made public.
