He beat Belfast City Councillor Claire Hanna in a vote of over 250 party delegates on Thursday night to replace Conall McDevitt, who resigned from politics last week.
The new MLA, who will be co-opted by the assembly, told UTV after the vote that he was "absolutely overwhelmed."
Describing his predecessor as "an outstanding parliamentarian", he said that Mr McDevitt had left "a vacuum" which would be difficult to fill.
A father of three, Mr McKinney grew up in Enniskillen, Co Fermanagh before beginning his journalistic career. The 51-year-old is best known for the time he spent as news anchor at UTV.
In 2010, he stood in the Westminster election as the SDLP candidate for Fermanagh South Tyrone, but failed to be elected.
"It is an honour to have been selected by the delegates in south Belfast to represent them and the whole constituency in the Northern Ireland Assembly," he said on Thursday.
"People are disillusioned with the stalemate at Stormont and deserve so much more."
We need reconciliation, social justice and prosperity for this region.
Fearghal McKinney on UTV Live Tonight
Ms Hanna congratulated the politician on his selection, joking that since she was due to give birth in two months losing the vote would mean she could spend more time with her children.
"It's been a really busy six days for me and Fearghal," she added.
Party leader Alasdair McDonnell added: "I am delighted to have Fearghal join the team in south Belfast and in the Assembly.
"Over the past many years his commitment to the party has been impressive and I am confident that with the ability and dedication that Fearghal has displayed so far he will serve the people of south Belfast well into the future."
His selection for the post comes less than a week after Mr McDevitt quit politics over a £6,750 payment he received back in 2010 from PR company Weber Shandwick without declaring it. The former leadership contender described it as "a serious breach of the MLA code".
In an emotional interview with UTV on the day of his resignation, he said: "I feel like I've let myself down, I've let my constituents down ...
"I have failed in my duty to uphold the standards expected in public office."
Mr McDevitt had been the managing director of the company when he quit his job to move into politics three years ago.