Craig, who was previously sales director at Metro International New York, is expected to take up the role at the end of the summer.
It is not clear who Craig will report to, as NI has yet to unveil a management structure for the paper.
NI group MD Clive Milner is believed to be overseeing the project with Metro International New York's former editor-in-chief, Stefano Hatfield, who joined NI last September.
The appointment marks a return to NI for Craig, who previously worked at The Times before going on to develop his career at the Evening Standard. In his new role he will now take on his old paper for advertising in the London market.
Media Week revealed on 9 May that News International was set to launch a free London paper irrespective of whether it wins the contract to distribute a paper on the London Underground or a separate contract with Network Rail for mainline London railway stations.
Last week Media Week revealed that NI had registered a possible name, thelondonpaper, and a logo with the Patent Office.
Network Rail completed the initial stage of its tender process last week and a decision is expected shortly.
London Underground has completed its pre-qualification response stage and will be offering invatations to tender to shortlisted companies during July.
NI is believed to be confident of winning one or both contracts, but is also looking at distributing the paper outside tube stations and through dump bins on pavements and in coffee shops.
The publisher already has an arrangement with Starbucks to sell The Times.
NI declined to comment.
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