She is the first non-white female cabinet-level official appointed within the Trump administration.
Mrs Haley is the daughter of Indian immigrants and had been a vocal critic of Mr Trump on the campaign trail.
The 44-year-old has been characterised as a rising star within the Republican party and is the youngest governor in the US.
Although she eventually voted for Mr Trump, the governor had lamented she was "not a fan" of either him or rival Hillary Clinton.
Mrs Haley endorsed Florida Senator Marco Rubio during the Republican primaries, later throwing her support behind Senator Ted Cruz - Mr Trump's final rival before he became the party's nominee.
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