Mr Schwarzenegger will replace Republican presidential candidate Donald Trump as host in 2016.
Mr Trump and the broadcaster parted ways after he made derogatory comments about immigrants in June.
He continues to lead polls among candidates for the Republican presidential nomination.
Mr Schwarzenegger was governor of California for eight years after an acting career that took in some hugely popular films, such as The Terminator. He has returned to acting since he left office in 2011.
An NBC executive said his "personal passion" for the format of the show and his "fresh take... made him the man to hire".
The show involves celebrities taking part in various business tasks in teams, with one individual sent packing each week with the words "You're fired" ringing in their ears.
Since 2004, hotel tycoon Donald Trump had been the host of The Apprentice and later its spin-off Celebrity Apprentice.
But controversial comments he made about Mexicans led to a deterioration of his relationship with NBC, which cancelled its broadcasts of Miss USA and Miss Universe pageants - previously co-owned by Mr Trump.
In June, Mr Trump accused Mexicans of adding drugs and crime to the US as he announced he was seeking the Republican presidential nomination.
"They're bringing drugs, they're bringing crime, they're rapists," he said.
He also pledged to build a "great wall" on the US border with Mexico and insisted it would be paid for by Mexicans.
The actor and former governor of California, Arnold Schwarzenegger, has been named the new host of NBC's competition show Celebrity Apprentice.