Li Qiang, 58, has been appointed party chief of Shanghai, the official Xinhua news agency said.
The announcement comes days after the conclusion of the 19th Party Congress, a key Communist conclave that handed Xi a second term and crowned him as the most powerful Chinese leader in decades.
Li worked under Xi in Zhejiang province from 2003 and 2007, when the latter was the party chief there.
He was elevated to the country's powerful 25-member Politburo earlier this week during the party congress, a twice-a-decade meeting to reshuffle leadership roles.
Xi has promoted a number of officials known to him from his Zhejiang days to top political and military posts, including Cai Qi, the party secretary of Beijing.
In Shanghai, Li has replaced Han Zheng, a protégé of former President Jiang Zemin who was this week elevated to the country's all-powerful seven-person Politburo Standing Committee.
All Shanghai party secretaries since 1989 save one have ended up with a seat on the top body, which calls the shots in governance of the world's second-largest economy.
Last June, Li was promoted from governor of the eastern coastal province of Zhejiang to party secretary of neighbouring Jiangsu, the province with the second strongest economy in the country.
That Jiangsu position will now be filled by Lou Qinjian, the former secretary of Shaanxi province, according to Xinhua.
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