Polls suggest the centrist leader will face a difficult battle against ex-leader Benjamin Netanyahu, the divisive figure at the heart of the prolonged political crisis.
Yair Lapid has become Israel's interim prime minister after the country's parliament voted on Thursday to dissolve itself, triggering the country's fifth election in just over three years.
The foreign minister and veteran centrist party leader took over at midnight (2300 CET) and will head the country ahead the the elections scheduled for November 1.
He takes over from current prime minister Naftali Bennett, who has said he will not run in the vote.
Polls indicate it will be a difficult road for Lapid to defeat his main rival, former Prime Minister Benjamin Netanyahu, a divisive figure who is at the heart of Israel’s protracted political crisis.
The upcoming vote promises to be another referendum on Netanyahu, who is adored with cult-like reverence by his admirers and reviled with equal strength by his opponents.
After hours of delays and behind-the-scenes dealings, a large majority of Israeli MPs voted on Thursday to dissolve parliament, paving the way for the November election.
Lapid was the architect of the outgoing eight-party coalition government, which collapsed just over a year after it was formed due to infighting and a string of defections.
The former author, newspaper columnist and TV host, will also be the first Israeli prime minister since 2009 to support a two-state solution with the Palestinians, though he will not be able to launch any major initiatives during his caretaker term.
Netanyahu, meanwhile, is a fervent nationalist who has aligned himself with religious and ultranationalist parties that oppose Palestinian statehood and support the West Bank settler movement, which is widely seen internationally as illegal and an obstruction to peace.
The 72-year-old Likud party leader, on trial for corruption in a series of cases, is seeking to regain his former position as prime minister.
The last coalition lost its parliamentary majority after the government failed to pass a law guaranteeing more than 475,000 settlers in the occupied West Bank the same rights as other Israelis.
Naftali Bennett, an ardent defender of the settlements which are contrary to international law, preferred to sacrifice his government, announcing his intention to dissolve parliament to call new elections.
In mid-July, Lapid will welcome to Israel the American President Joe Biden for his first tour in the Middle East since his arrival at the White House.