Schiller was Valeant's chief financial officer from December 2011 to June 2015 and is now on the company's board. Before Valeant, he worked in investment banking at Goldman Sachs for 24 years.
Robert Ingram, a Valeant director since December 2010, will be chairman, the Canadian company said.
Valeant shares were down 3 percent at $97.19 in premarket New York trading. Reports broke on Tuesday evening of the appointment of a CEO to replace the management team that had been running Valeant since Pearson was hospitalized in late December.
Activist investors Bill Ackman applauded Shiller's appointment.
"We think Howard will do an outstanding job and have enormous confidence in him," he told CNBC. "Howard benefits by having worked alongside Mike (Pearson) for many years and having remained on the board since he stepped down as CFO. As a major shareholder of the company, his interests are directly aligned with those of other shareholders."
Ackman also called Bob Ingram "a superb choice as chairman" and wished Pearson a speedy recovery.
— CNBC contributed to this report.