In a sign of further instability at the top, the bank said on Wednesday Chairman Massimo Tononi would also resign after an upcoming shareholder meeting called to approve a rescue plan which envisages a 5 billion-euro ($5.6 billion) cash call and a record 28 billion-euro sale of non-performing loans.
A source close to the banks backing the planned share sale said Tononi's departure did not come as a surprise and was not a cause for concern.
Morelli, who will take on as CEO on Sept. 20, was currently head of Bank of America Merrill Lynch in Italy. He worked at Monte dei Paschi until 2010, both as deputy general manager and chief financial officer, before joining rival Intesa Sanpaolo.
The Rome-born banker has previously worked at JP Morgan, which along with Mediobanca leads the consortium of banks backing Monte dei Paschi's new share sale.
Morelli emerged as the front runner to replace the outgoing CEO immediately after Monte dei Paschi announced last Thursday that Fabrizio Viola had agreed to step down.
Sources have said the banks behind the rescue as well as the government feared Viola would struggle to drum up support from investors for the new share sale having already overseen two cash calls totalling 8 billion euros since taking charge in 2012. [nL8N1BP2ZP]
The Tuscan lender is worth just 670 million euros ($752 million) after its shares plunged 81 percent this year.
The change at the top is likely to delay the presentation of Monte dei Paschi's new business plan which had been due at the end of September.
The share sale is also likely to be put back until after a referendum on constitutional reform on which PM Renzi has staked his political future.
With the vote set to take place by early December Monte dei Paschi could tap markets in January or February, a source close to the matter said last week.
Monte dei Paschi faces competition in its search for fresh cash from healthier rival UniCredit <CRDI.MI> which is expected to seek to raise more capital under its new chief executive Jean Pierre Mustier.
Unlike Spain or Ireland, Italy did not move to help its banks during the financial crisis. But when a harsh recession saddled its lenders with a collective 360 billion euros of soured debts, Rome found itself with little room for manoeuvre due to the introduction of new European rules on allowing bank bailouts.