"I am pleased to announce that I intend to nominate highly respected Admiral Ronny L. Jackson, MD, as the new Secretary of Veterans Affairs," said Trump, who has also replaced his secretary of state and national security advisor in the last month.
"I am thankful for Dr. David Shulkin's service to our country and to our GREAT VETERANS!" he said on Twitter.
Pentagon official Robert Wilkie would serve as interim department chief until Jackson receives Congressional approval, the president added.
Shulkin's sacking had been widely predicted after he was accused of spending $122,000 on a nine-day trip to Europe with his wife, which included sightseeing at castles and taking in professional tennis matches.
He was one of the few senior officials in the Trump administration who had also served during the presidency of Barack Obama.
Jackson's stock with Trump rose after he pronounced in January that the 71-year-old president was in "excellent" health.
After releasing the results from Trump's physical, Jackson said "he has incredible genes and that's the way God made him."
Shulkin's departure caps a dizzying month of changes to the Trump cabinet, most notably the sacking of Rex Tillerson as secretary of state on March 13.
Trump's top economic advisor Gary Cohn also exited the White House after the president announced plans to impose tariffs on imports of steel and aluminum, a policy Cohn did not endorse.
And National Security Advisor HR McMaster was axed only six days ago, replaced by the hardline Fox News pundit and former UN ambassador John Bolton.
The Department of Veterans Affairs is the second-largest federal agency after the Pentagon, employing 360,000 people.
The 58-year-old Shulkin had served as undersecretary of veterans affairs for health under Obama.
He previously worked as chief medical officer of the University of Pennsylvania health system.
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