Jamie Whyte is Act's new leader and David Seymour will be the party's candidate in Epsom at this year's election while John Boscawen has resigned as Act president.
The decision to appoint Dr Whyte as leader was made by the Act board today.
Dr Whyte is expected to take over in about a month at the party's AGM.
Dr Whyte, aged 48, has recently returned to live in New Zealand from abroad and has only recently become active in the party.
Mr Seymour, aged 30, first stood for Act in 2005 in Mt Albert against former Prime Minister Helen Clark.
Last election he stood in Auckland Central.
He has been working for a think-tank in Canada and may well have returned permanently had he not been made candidate for Epsom.
The decision to split the roles was the most difficult for the board.
Dr Whyte stood against Mr Boscawen who campaigned strongly against splitting the roles, following the electoral disaster last term when Don Brash became leader and John Banks was the Epsom candidate.
Act, National's support partner, has held Epsom since 2005, allowing it to bring in MPs even if it doesn't make the 5 per cent threshold.
The current leader and Epsom MP John Banks announced in December he would be stepping down after being committed for trial on filing a false electoral return relating to his Auckland mayoral campaign.
Dr Whyte said there would be no surprises in Act policy.
"It will be pure Act."
He said he had lived in NZ for about six of the last 20 and that would be a slight disadvantage. But he had followed New Zealand politics closely.
He said he was disappointed that tonight's TV3 Poll has Act in zero.
He downplayed the risk of splitting the roles of Act leader and Epsom candidate.
"David and I have an uncanny tendency to agree on everything."
While he had written about drug legalisation he had "no mandate to make drug legalisation one of our policies."
Mr Boscawen confirmed today he had resigned as Act President and would be reconsidering his financial support of the party.
He would no longer be fundraising for the party which he had done for four elections, but he would remain a member.
He had told the board yesterday of his intentions.
He wished Dr Whyte and Mr Seymour every success but he believed there were risks in splitting the role.
He said retaining Epsom should be the priority and he was the best person to have kept the seat.
Prime Minister John Key said through a spokeswoman: "The Prime Minister congratulates Jamie on his selection and looks forward to working with him. He wishes him and Act well for the 2014 election."
The right-wing Auckland Councillor for the area Cameron Brewer said the result "represents a generational shift for the Act Party."
He said it was critical that Mr Seymour be able to convince people that Act would retain Epsom.
"Only when Epsom is seen as a foregone conclusion, will Kiwis up and down the country be prepared to give their party vote to Act."
Despite being young, Mr Seymour had campaign experience and the fact he had won the nomination showed he was politically astute.
"He also has the advantage of having little political baggage. So he brings a clean slate to an electorate that has been getting a little wary."
Mr Seymour has been a senior fellow at the Manning Foundation think-tank in Calgary, Canada, where he has lived for five of the past seven years.
He was active in Act on Campus at Auckland University, where he got degrees in electrical engineering and philosophy.
He stood for Act in Auckland Central last election then went to work in the office of John Banks, the only Act MP elected in 2011. He also stood against Helen Clark in Mt Albert in 2005.
He went to Auckland Grammar.
His Facebook page lists is political views as libertarian and his religious views as agnostic.
His interests are in coaching rugby, building sports cars and "being at the beach"
The Manning Foundation says he has been leading a project to develop market oriented policy for municipal government.
He has also worked the Frontier Centre for Public Policy.