Deighton's selection follows an extensive three-month international search for one of the most sought after positions in world sport.
Speaking publicly following his appointment, Deighton, 49, said: "As a Londoner passionate about sport, I am extremely excited about this opportunity. The Games has an enormous potential to inspire young people. The memories of the Games I listened to and watched in my childhood are some of the most inspirational memories I have."
Much of Deighton's 22 years at Goldman Sachs has been focused on establishing the firm's presence and building leading business positions across Europe. He has operated in complex, international environments and has been instrumental in forging relationships with regulatory authorities in Europe.
London 2012 chairman, Sebastian Coe, said many highly qualified applicants were considered.
"We selected Paul because of his experience in leading large international organisations and projects and his track record of managing and growing large teams of people in complex and diverse environments," he said.
London 2012 deputy chairman and former CEO, Keith Mills, said: "Paul's experience at the most senior levels of Goldman Sachs, one of the most successful firms in one of the world's most demanding industries, will be vital to helping the London Organising Committee reach all its key revenue raising targets and deadlines."
Deighton will be responsible for the day-to-day operations of LOCOG and will oversee the planning and implementation of a wide range of diverse and high profile Olympic and Paralympic programmes, from sponsorship and marketing to ticketing and the Torch Relay.
Tessa Jowell, Olympics Minister, said: "Paul will bring a wealth of experience and knowledge to the task of planning and then staging the Olympic Games and Paralympic Games in 2012.
"His business background and acumen will mean that LOCOG and the Games will be superbly well-run, as well as helping deliver the sponsorship and financial support so essential to the success of the Games."
