Mr Rivlin, a former parliamentary speaker and Cabinet minister, defeated long-time MP Meir Sheetrit, by 63 to 53 in a secret run-off ballot.
He will succeed Shimon Peres, 90, who ends his seven-year term in July.
The Israeli president occupies a largely ceremonial position and has no formal role in peace talks with the Palestinians.
Mr Rivlin, a member of Prime Minister Benjamin Netanyahu's right-wing Likud party, will become Israel's 10th president.
'Man of the nation'
He won when voting on Tuesday went to a second round.
"From this moment, I do not belong to any party; rather, I belong to everyone, a man of the nation," he told Knesset members after the poll.
"I stand here before you with a great mission. Long live the Israeli democracy! Long live Israel!"
The 74-year-old opposes the creation of a Palestinian state, putting him at odds with the platform adopted by Mr Netanyahu.
He is also a supporter of Jewish settlements in the occupied West Bank, another central issue in the dispute between Israel and the Palestinians.
Reuven Rivlin will become Israel's 10th president
(Reuven Rivlin Profiles)
* Born in 1939 in Jerusalem
* Trained as a lawyer
* First elected to the Knesset (parliament) in 1988
* Former chairman of Betar Jerusalem
sports association and loyal supporter of their football team
* Served as minister of communications under then PM Ariel Sharon between 2001 and 2003
* Elected Knesset Speaker in 2003 in an uncontested victory
Congratulating Mr Rivlin at a ceremony on Tuesday, Mr Netanyahu cited their common political history.
"I know you will do your utmost as president to meet the two-fold mission of unifying the nation and showing unity in the face of external challenges," the PM is quoted as saying by Reuters news agency.
"I promise, as a prime minister from a similar background, to work with you."
Observers say Mr Peres, a Nobel peace laureate who is popular among many Israelis, will be a hard act to follow.
Mr Rivlin, who will be sworn in on 24 July, is expected to shift the presidency's focus from international affairs to more domestic matters.
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