Prince Mohammed bin Salman replaces Salman's nephew, Prince Mohammed bin Nayef, who has also been fired from his job as Interior Minister.
When King Salman, who is 81, took the throne in January 2015, he appointed his son Defense Minister. Bin Salman has been responsible for controversial military decisions such as the Saudi-led campaign of airstrikes in Yemen and support for the creation of the Islamist Army of Conquest in Syria, a rebel group mainly comprised of the Al-Qaeda affiliate Al-Nusra Front and the Salafist Ahrar al-Sham.
Mohammed bin Nayef, 57, has deep ties to Washington and is seen as the most pro-American of the Saudi leadership. He has years of experience in intelligence and has been dubbed "the prince of counter-terrorism" by US officials.
He led a crackdown against al-Qaeda cells in Saudi Arabia between 2003 and 2007 and has been vocal about his country's fight against extremists. In February, he received a counter-terrorism award from the CIA.
Despite bin Nayef's experience, the decision to demote him did not come as a surprise, expert in Saudi affairs Muhammed al Masari told Sputnik.
"Now some in Saudi Arabia are betting on the support of Donald Trump in order to implement new domestic and foreign policy. However, this is fraught with dangers, because far from everyone in Washington supports the US President and an investigation has been launched against him."
On June 5, the Saudis and their allies severed diplomatic ties with Qatar in protest at the Gulf state's alleged support for terrorist groups. Saudi Arabia also closed its land border with Qatar, across which around 1,000 trucks of food supplies and other goods had been transported every day.
In spite of the embargo, last week the Pentagon pushed on with plans for military cooperation with Doha and deployed two warships to the Persian Gulf for joint naval exercises with Qatar.
"The military and industrialists were against Trump's decision to send a warship to participate in joint exercises with Qatar," al Masari said.
"At the same time that Donald Trump gives Saudi Arabia a green light on leadership in the region, he is being attacked by political forces in the US."