Trump made the announcement on Twitter and later issued a separate statement thanking Shulkin for his services.
"I am pleased to announce that I intend to nominate highly respected Admiral Ronny L.Jackson, MD, as the new Secretary of Veterans Affairs....," Trump wrote on Twitter.
"I appreciate the work of Dr. David Shulkin and the many great things we did together at Veterans Affairs, including the VA Accountability Act that he was helpful in getting passed. He has been a great supporter of veterans across the country and I am grateful for his service," Trump said in a later statement.
Early this month, Trump had unceremoniously fired Secretary of State Rex Tillerson and nominated Mike Pompeo, the CIA Director, for the top diplomatic position in his cabinet.
Both the cabinet positions need to be confirmed by the US Senate.
"In the interim, Hon. Robert Wilkie of DOD will serve as Acting Secretary. I am thankful for Dr. David Shulkin's service to our country and to our GREAT VETERANS!," Trump said in another tweet.
Trump said Jackson was highly trained and qualified.
"As a service member himself, he has seen firsthand the tremendous sacrifice our veterans make and has a deep appreciation for the debt our great country owes them," he said in a separate statement.
Wilkie, who will serve as the Acting Secretary for the department, is currently the Undersecretary of Defence for Personnel and Readiness at the Department of Defence and overseas health affairs, welfare and quality of life for military families.
Jackson has served as the White House physician during the past three administrations of Presidents George W. Bush, Barack Obama and Donald Trump.
Since arriving at the White House, he has directed the Executive Health Care for the President's Cabinet and Senior Staff, served as physician supervisor for the Camp David Presidential Retreat, held the position of physician to the White House and led the White House Medical Unit as its director.
A native of Texas, and a graduate from Texas A&M University with a Bachelor of Science in Marine Biology; Jackson began his active duty naval service in 1995 and went on to become the honour graduate of the Navy's Undersea Medical Officer Program in Groton, Connecticut.
The opposition Democratic Party expressed concern over the firing of Shulkin.
Democratic leader Nancy Pelosi called Shulkin's dismissal "a troubling step in the Trump Administration's ultimate goal of VA (Veterans Affairs) privatisation".
"From day one of this administration, the president has openly encouraged and embraced Koch Brothers-led forces as they work around Congress and behind closed doors to dismantle veterans' health care," Pelosi said.
She urged the members of Congress to join hands against any effort to privatise VA.
Senator Johnny Isakson, chairman of the Senate Committee on Veterans' Affairs, said Shulkin had made a tremendous impact toward improving the lives of veterans during his time at the US Department of Veterans Affairs.
"He has been instrumental in all that we have accomplished in the last year, and I thank Dr. Shulkin for his dedicated service to our country and our veterans," he said.
Concerned Veterans for America executive director Dan Caldwell said Shulkin made significant headway in reforming the department, but ultimately became a distraction from the important task of improving health care for the veterans.
"The Trump administration has made great progress over the last year reforming and fixing the VA, however there is still much work to be done," he said.
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