Trump announced two weeks ago that Sanders, whose tenure was marked by controversy and questions about her credibility, would be leaving at the end of the month.
Grisham, a fixture in the Arizona Republican Party, was one of Trump's first hires during his presidential campaign-as a press aide in 2015.
The first lady announced the news on Twitter, saying she "can think of no better person to serve the Administration & our country".
Stephanie Grisham, who serves as the first lady's deputy chief of staff and communications director, will fill the vacancy left by Sarah Sanders. Since moving to the East Wing, she has developed a reputation internally as a trusted adviser and loyal defender of the first lady. Stephanie Grisham, Director of Communications for First Lady Melania Trump is the pick.
Principal Deputy Press Secretary Hogan Gidley, who was interested in the position, quickly tweeted his support for Grisham. Grisham has also helmed PR on the seemingly opposing views of the first lady to those of the President and navigated Melania Trump's silence in the face of headlines about Trump's alleged infidelities, which he denies.
Alabama's Roy Moore launches 2020 Senate bid despite Republican Party opposition
But he still enjoys a base of support in the deeply Republican state, particularly among evangelical voters. In the 2017 general election, Trump stood by Moore even after the allegations surfaced.
Grisham succeeds Sarah Sanders, whose last day at the White House is Friday. She would never say, 'I'm keeping Stephanie, " the source familiar who was said to be familiar with the selection process said.
"I've always found it sad that a group of women spend so much time attacking another woman, whose only goal is to help children", she said.
Sanders praised the pick of her successor.
Before working for the Trump campaign, Grisham spent years as a spokeswoman for Arizona elected officials, including the attorney general and the state's House speaker.
Sanders, the daughter of former Arkansas Gov. Mike Huckabee, was part of the 2016 Trump campaign and has been on the president's communications team since he took office. You know, like the White House press corps has a habit of doing for the television cameras. A former White House official told the Examiner that the claims about Melana Trump were untrue.
They just want President Trump's staff to serve him competently and Grisham will do that.