The Christian MP for Loughborough was elected to parliament in 2010 and was previously Financial Secretary to the Treasury. She'll continue in her role as Minister for Women and Equalities.
Her promotion is seen as part of David Cameron's attempts to bring more women into his cabinet which is predominantly men.
Minister for Faith and Communities Baroness Warsi told Premier's News Hour she thinks the women appointed to cabinet have earned their new positions, she said: "Liz Truss, who've I've known for many years Nicky Morgan, Esther McVey; phenomenally talented women who quite rightly should be in cabinet, and it was right that they've built up their experience over the last few years since being elected and now they're going to serve at the top table."
Nicky Morgan replaces Michael Gove, who becomes Commons Chief Whip and will have an enhanced role in campaigning and doing broadcast media.
Mrs Morgan faced criticism from within her own party when in 2013 she voted against the introduction of same sex marriage in England and Wales, claiming marriage could only be between a man and a woman.
Issues facing the new Education Secretary include 'Operation Trojan Horse', the alleged plot by Islamic radicals to take over education centres in England and run them according to their agenda.
She'll be joined in the department by Nick Gibb who returns to Government as Minister of State for Schools, "to ensure no let up in education reforms", according to a tweet from the Prime Minister as David Cameron announced his appointment.
The Prime Minister has also announced a number of high profile changes to his cabinet including the departure of William Hague from the Foreign Office. He'll be replaced by Defence Secretary Philip Hammond.
Mr Hague will become leader of the House of Commons before he retires altogether at the next general election.
He said: "I am delighted to be able to serve as Leader of the House of Commons, and to be able to campaign for Conservative candidates across the country.
"I want to finish in frontline politics as I began - speaking in Parliament and campaigning among the voters.
"After the general election I will return to my writing, while still giving very active support to the Conservative Party and campaigning on international causes I believe in."
Christian Conservative MP Alistair Burt, who was fired in the last reshuffle, tweeted his support:
"William Hague has been a great FS, contributed hugely to restoration of FCO. His work on PSVI deserves the Nobel Prize. Thanks my friend."Three Christians have lost their place in David Cameron's team.
He's also told Premier's News Hour what it feels like to be sacked from government, he said: "You go back literally to stacking shelves, you go back to the most routine thing you did before you were a minister. It's still good; you're a member of parliament, there's nothing better than that. But it's a funny business; you're reduced to the ranks."
The Environment Secretary Owen Paterson, Welsh secretary David Jones and Attorney General Dominic Grieve have all left the cabinet.
Stephen Crabb, also a Christian, will take up the Welsh secretary job.
Other appointments include Michael Fallon as Secretary of State for Defence and Liz Truss as Secretary of State for Environment, Food and Rural Affairs.
Here more from Baroness Warsi on Nicky Morgan and 'Operation Trojan Horse' here:
Here more from Alaistair Burt MP here: