Prime Minister Justin Trudeau named Ms Freeland to the job after Bill Morneau resigned on Monday.
Ms Freeland also keeps her job as deputy prime minister.
“It’s about time that we broke that glass ceiling,” Ms Freeland said.
She is credited with helping to negotiate the new free trade agreement with United States and Mexico and is trusted ally of Mr Trudeau.
Mr Morneau and Mr Trudeau reportedly butted heads at a time when the government was spending heavily to help the pandemic-hammered economy.
Mr Morneau said he was not asked to resign but added that he is no longer the appropriate the person for the job.
Canada’s government is predicting a historic 343 billion Canadian dollar (£198 billion) deficit for 2020-21 resulting from its economic and stimulus plans to battle the impact of Covid-19.
Mr Trudeau has called the spending a lifeline to Canadians battling to stay afloat.
“The coronavirus is still with us. This is a once-in-a-lifetime challenge for the whole country,” Ms Freeland said. “We will do whatever it takes to support Canadians.”
Ms Freeland is a 52-year-old Harvard graduate and Rhodes scholar who speaks five languages.
Mr Trudeau personally recruited Ms Freeland to join his Liberal Party while it was the third party in Parliament in 2013.
Ms Freeland had a senior position at the Reuters news agency and previously had risen rapidly at the Financial Times where she became Moscow bureau chief in her mid-20s during the collapse of the Soviet Union.
Ms Freeland also served as deputy editor of the Globe and Mail in Toronto and the Financial Times.
She was familiar to many TV viewers in the US because of her regular appearances on talk shows like Fareed Zakaria’s on CNN.
She has been a frequent critic of Russian president Vladimir Putin, who banned her from travelling to the country in 2014 in retaliation for Western sanctions against Moscow.
“The appointment of Freeland will be very popular, especially with women,” said Nelson Wiseman, a political science professor at the University of Toronto.
“She’s risen quickly because she is smart and competent. She impressed Trudeau in the Nafta (North American Free Trade Agreement) negotiations. It is still too early to speculate about a successor to Trudeau, but there is little doubt that she is currently the favourite with Liberal voters and, probably, the Liberal backbench.”
