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President Bidya Devi Bhandari appointed Khadka on the recommendation of the government led by Prime Minister Sher Bahadur Deuba.
Khadka, 72, was administered the oath of office and secrecy by President Bhandari amid an official ceremony at Sheetal Niwas on Wednesday.
During a meeting of the top leaders of the ruling party alliances held at his residence in Baluwatar on Tuesday evening, Deuba had proposed the name of Khadka as the new foreign minister of Nepal.
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Prime Minister Deuba has been holding the portfolio till now.
The post of the Foreign Minister had been vacant for more than two months after the formation of the new government led by Deuba.
With Khadka’s appointment, there are now seven ministers in the government, including Deuba and one minister of state.
He had served as advisor to then Prime Minister Krishna Prasad Bhattarai in the 1990s. He was also the minister of urban development in 2014.