"Ben Carson has a brilliant mind and is passionate about strengthening communities", the president-elect said in a statement, adding that the two had discussed his "urban renewal agenda".
Mr Carson is the first African-American to be nominated for Mr Trump's cabinet.
He endorsed Mr Trump in March after ending his own bid for the White House.
"Ben shares my optimism about the future of our country and is part of ensuring that this is a presidency representing all Americans,'' the statement from Mr Trump said.
Cabinet appointments need to be confirmed by the US Senate.
There are still major cabinet positions yet to be announced, including the next secretary of state.
As well as his top team, the president-elect has about 4,000 government positions to fill.
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