Duncan, the BBC's man behind digital terrestrial television service Freeview, had not been mentioned among the frontrunners for the job.
Earlier this week, Peter Fincham, executive producer of controversial TV show 'Brass Eye', as well as 'Da Ali G Show' and 'Bo Selecta', was being tipped for the job after Dawn Airey, the managing director of Sky Networks at BSKyB, ruled herself out of the running to replace Mark Thompson.
Channel 4 chairman Luke Johnson said: "Andy is the brightest media executive of the Channel 4 generation and I think he's going to be a great champion of Channel 4's public-service mission and its unique brand of creativity.
"He must take much of the credit for Freeview's astonishing success and he's also been integrally involved in a broad range of the BBC's key issues in the last three years, including digital strategy and switchover, brand strategy and the BBC's Charter Renewal communications."
Johnson added that Duncan brings with him to Channel 4 a combination of genuine public-service credentials with a strategic understanding of how digital media is developing.
Thompson, now BBC director-general, said that he was sorry to see Duncan go and described his appointment as "very imaginative".
"Andy Duncan has transformed the BBC's marketing and the organisation's attitude to audiences. He has played a pivotal role in the success of Freeview and in developing the BBC's digital strategy.
"We are sorry to see him go but this is a very imaginative appointment. The BBC supports a strong and dynamic Channel 4 and we wish Andy well in his new role," Thompson said.
Duncan said that he had been a great admirer of Channel 4 for a long time, and that while all broadcasters were under pressure from the growth of digital TV, Channel 4 could face the future with confidence.
"Public demand for innovation and originality in television has never been higher and Channel 4, with its fantastic track record of delivery and its unique identity and remit, is best placed to satisfy that demand," he said.
Duncan's appointment follows new figures from Broadcasters' Audience Research Board out today, showing that Channel 4 is enjoying one of its best periods in recent years as it continues to steal viewers away from BBC One.
Channel 4 has been boosted by hits such as 'Shameless', 'Ramsey's Kitchen Nightmares' and the ongoing success of the fifth season of 'Big Brother'. The channel's audience is up 4% for the first half of the year to 9.77%, according to the Barb figures.
As well names like Fincham and Airey, others mentioned during the course of the short race included Channel 4's director of television Kevin Lygo and Endemol chairman Peter Bazalgette -- both ruled themselves out of the race.
BBC director of television Jana Bennett was tipped, as was BBC director of factual and learning John Willis and former BBC governor Heather Rabbatts.
Duncan will take up his new post at Channel 4 as soon as possible.
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