Experienced frontbencher Greg Hunt will become the minister responsible for health and sport, replacing Sussan Ley who resigned over an expenses scandal.
Health is considered an area of weakness for the Coalition, which almost lost the last election because of Labor's Medicare scare campaign, and Mr Hunt will need to deal quickly with issues such as the GP rebate freeze, spiralling private health costs and a pharmacy review.
Prime Minister Malcolm Turnbull lauded Mr Hunt's strong policy, analytical and communication skills.
Mr Hunt is currently the Minister for Industry, Innovation and Science.
That portfolio will go to Arthur Sinodinos and the cabinet secretary position previously held by Senator Sinodinos will return to a senior public servant in the prime minister's department, meaning the size of cabinet shrinks by one person.
"This portfolio is critical to generating the jobs of the future," Mr Turnbull said.
"Senator Sinodinos's extensive public policy experience over many, many years gives him a strong understanding of the key drivers of new sources of economic growth and how government can ensure that its policies deliver he innovation, the investment, the technology that will secure the future for our children and grandchildren.
"As cabinet secretary, Arthur restored traditional cabinet processes. That being done, he can now turn his talents to a front line portfolio."
Ken Wyatt, who was assisting minister to Ms Ley, will become the Minister for Aged Care and Indigenous Health.
"He is now the first indigenous person appointed to the Commonwealth ministry," Mr Turnbull said.
"His extensive knowledge and experience as a senior public servant in indigenous health, coupled with his work as an assistant minister in this portfolio, makes him an ideal minister for this area."
Backbencher Michael Sukkar has been appointed as assistant minister to the Treasurer.
The new ministers will be sworn in by the Governor-General Peter Cosgrove on Tuesday.
"These changes will further strengthen my ministry by combining experience and new talent," Mr Turnbull said.
Mr Turnbull last reshuffled his cabinet in July last year when Mr Hunt moved on from a decade in charge of environment policy into industry.
Former health minister Sussan Ley resigned from cabinet last week over allegations that she misused taxpayer-funded expenses to visit the Gold Coast where she bought an $800,000 investment property.
Ms Ley has insisted she did not break any rules.
