Kevin Aylward was chosen Sunday by a party executive board during a meeting in St. John's.
The 50-year-old was chosen from a field of seven candidates to replace Yvonne Jones who suddenly resigned last Tuesday for health reasons.
Aylward, who had been working in the private sector since leaving politics in 2003, said he decided to return over concerns about the proposed Lower Churchill hydro project and the state of the province's fishery.
"I was looking at re-entering politics at some point, but then this opportunity presented itself because of the health of our leader (Jones)," said Aylward.
Aylward said he will lead a party that will present a clear alternative and listen to voters concerns, especially over the Lower Churchill.
"There are many issues that are coming out of that (project) including the increased electricity rates that many people are having difficulty understanding," he said.
Aylward said the Liberals will work on a specific policy proposal for the project that would be part of the party's platform.
The former environment minister said he plans to run for his old seat in the riding of St. George's-Stephenville East. The seat is currently held by Conservative Education Minister Joan Burke.
Party president Judy Morrow said Aylward's experience was the deciding factor for the 21 board members who made the final choice.
"He brings a wealth of political experience and he's held a number of (cabinet) portfolios," said Morrow.
She said with the election looming so close it was felt the party needed someone who could "hit the ground running" as leader.
"The short time frame that we are dealing with made experience a very important factor, Morrow said. "I have every confidence that he will do a tremendous job going forward."
The abbreviated leadership process closed at noon Friday and culminated with the board's decision after consultations through the weekend with party members.
The candidates were chosen after an interview process conducted Sunday.
Aylward emerged from a slate of potential leaders that included businessman Brad Cabana, lawyer Bernard Coffey and former provincial legislature member Danny Dumaresque.
St. John's real estate agent Rodney Martin, consultant Ryan Lane and Charles Murphy were also in the running.
The provincial election is set for Oct. 11.