Turkish Transport Minister Binali Yildirim was unanimously elected on Sunday as the new leader of the ruling AK party and therefore the prime minister.
One of the cofounders of the AK party along with Erdogan, Yildirim, 60, who was the sole candidate, won all the votes from the 1,405 delegates at an extraordinary party congress.
Hours later, Erdogan gave Yildirim the mandate to form a new government as prime minister following the resignation of Ahmet Davutoglu, the presidency said.
Davutoglu had served as foreign minister, but after Erdogan became president and he prime minister, conflict began to emerge and, in recent months, the two men disagreed on several issues, including negotiations with the European Union
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"The problem is the constitution is not clear on where the prime minister and president's power and authority begins and ends," Nurettin Canikli, the head of AKP's parliamentary bloc, told Al Jazeera.
"Even though they're very good friends, and have the same political background it's still possible for them to have different views on each topic. When they tried to use their authority at the same time, they failed to meet in the middle."
Al Jazeera's Jamal Elshayyal, reporting from the capital Ankara, said that while Erdogan was no longer AKP leader, he was still its founder and spiritual leader.
"Now, it seems that until or unless the constitution is changed to allow for a presidential system, the AKP is opting for a prime minister who will carry out the wishes of the president, rather than one with his own political agenda," Elshayyal said.
"In terms of finding a leader who would not pose some sort of threat to the popularity or the authority of Erdogan, Yildirim fits the bill perfectly."
Yildirim has said that he will "work in harmony with Erdogan".
"The new chairman won't interpret his authority like Davutoglu did," Canikli said. "He will understand that the president has the ultimate authority and his is the last word."
Government critics said the sudden change in leadership showed that the AKP was no longer able to provide political and economic stability and underlined division in its ranks.
"With Sunday's convention, the AKP is hoping to refute that and show the party remains as united as ever," Al Jazeera's Elshayyal said.
