Current CFO Kathryn McQuade will retire as of Nov. 1, but will remain with the company as an advisor to Grassby until next May.
"My decision to retire at this time reflects my belief that a CFO should have a long-term commitment to the company," McQuade said in a statement.
"Brian is ready to take the reins and his deep financial expertise and continuity of leadership will drive overall financial strength and shareholder value as the company enters this significant period of change."
Chief executive Hunter Harrison thanked McQuade for her service to CP.
"She has arguably been one of the top CFO's in the industry for many years and we are sad to see her go," Harrison said in a release.
"It is also with great confidence that we welcome Brian to his new role as he will be instrumental in moving CP's financial performance forward."
Last week, CP Rail (TSX:CP) announced that Mike Franczak, executive vice-president and chief operations officer, was stepping down after 25 years with the company. His resignation was effective immediately, and the company said his position is not being replaced at this time.
New York hedge fund Pershing Square Capital Management became the largest shareholder of Canadian Pacific last year, touching off a bitter months-long battle that resulted in the departure of the railway's chief executive, its chairman and several directors.
Harrison took the helm at the railway operator this summer. The former CEO of Canadian National Railway (TSX:CNR) is credited with turning CN into one of North America's most successful railways.
Harrison had said the railway could cut expenses as a percentage of revenues to the mid-60 range in four years — an operating ratio target CP's former management and board deemed unrealistic.
During the second quarter, CP's operating ratio was 82.5, an increase of 80 basis points.
The company has started to undergo changes under Hunter's direction. Last month, it appointed Michael Redeker, who came from ATB Financial, as chief information officer.
Grassby, currently senior vice-president finance for CP, told a conference last month that Harrison continues to examine the railway's network and terminals, ask questions and focus on service as it tests a new train design.
Already, he said the speed of decision making has been improved and there is an increased focus by employees on service and controlling costs.
In September, the company said it reached a tentative agreement with members of the United Steelworkers Local 1976, which represents 800 clerical and intermodal employees at CP.
Canadian Pacific transports coal, fertilizer, grain, automobiles, consumer goods and other materials across its North American rail network.