Whitman's rejection will be especially painful, given she publicly withdrew from Uber's CEO search in July but then quietly re-entered the fray late on Friday according to a New York Times report. Now, the ride-hailing giant has made it official, and will no doubt hope its new leader can bring stability to the company.
Kalanick, who remains on the Uber board and was involved in hiring Khosrowshahi, welcomed his replacement.
Benchmark, the company's largest shareholder, is locked in a legal fight with Kalanick over the allocation of board seats.
Two more people were in the running, former GE CEO Jeff Immelt and former HP CEO Meg Whitman, but Jeff Immelt withdrew his name who was in consideration for the position. It is not known if Khosrowshahi himself was the mysterious third contender though this is all speculation at the moment.
For the 14-member, bitterly divided board of directors, which is now running its day-to-day operations, Mr Khosrowshahi is a compromise choice that the dysfunctional yet highly innovative company needs.
"He's adult enough to face the cultural issues at Uber, and he's not stodgy or from a legacy technology company".
Khosrowshahi said his priorities were to meet with the leadership team and fill the many management holes.
Uber board recently stated that "We're really fortunate to gain a leader with Dara's experience, talent and vision".
Who could the next CEO of Uber be?
Khosrowshahi wasn't definitive, the person said. But in lieu of that, business experts believe an experienced manager is the best bet.
'What got us here is not what's going to get us to the next level'.
In a memo to his now former employees, Dara Khosrowshahi, 48, says, "I have to tell you I'm scared". Uber now has vacancies for several key positions including a CFO (officially), chief operating officer, chief marketing officer, general counsel and senior vice president of engineering. Among other allegations, Benchmark accused Kalanick of trying to "acquire the power to pack the Board to facilitate his desired re-appointment as Uber's CEO". Ultimately, the board decided on the third candidate, Khosrowshahi.
However, Expedia board chairman Barry Diller appeared to confirm the choice in a filing with the Securities and Exchange Commission. His financial background could prove useful for Uber, which is now without a chief financial officer. He also alluded to Uber's recent scandals, saying, "This company has to change". Expedia has so far fended off Priceline, Airbnb and Google, which have increasingly encroached on its travel and lodging booking business.
But the move spurred criticism by privacy advocates, who said the company should give users greater control over whether they share their location data. Expedia also owns travel brands Orbitz, Travelocity and Egencia. He is also driven but in a different way.