Bromance flourishes in Turkey: Erdogan ally appointed prime minister
Binali Yildirim, who immediately vowed to "work in total harmony" with the president, is expected to be officially appointed on Sunday.
"We will work in total harmony with all our party comrades at all levels, beginning with our founding president and leader," said Yildirim after being named party head.
The 60-year-old is regarded as one of Erdogan's closest long-time confidantes and served as transport minister from 2002 to 2013 with little fuss or fanfare, and then again from 2015.
The new power couple very rarely differ on opinions and policies, with reports suggesting the only serious conflict between the two is that Erdogan supports the Fenerbahce football team while Yildirim follows the Istanbul team's arch-rivals, Galatasaray.
Both strongly condemn negotiations with the outlawed Kurdistan Workers' Party (PKK), which has claimed responsibility for a number of attacks across the country since a ceasefire collapsed last year in the wake of a renewed crackdown on separatists following a strong showing for Kurdish groups which cost Erdogan a super-majority in parliamentary elections.
"There's not one millimetre of difference between the AKP faithful and the president," said party spokesman Omer Celik, whose party has attempted to conceal any signs of fragmentation since Davutoglu's surprise resignation.
Earlier this month, the former prime minister announced he would not run at the next elections despite his "successful" term as head of government.
Davutoglu was formerly a close ally of the president and served as foreign minister in Erdogan's cabinet.
However, tensions between the two have emerged on a number of occasions since the 2015 elections.
Most recently, an EU deal aimed at regulating the flow of refugees into Europe as well as the fate of detained journalists saw the two AKP leaders lock horns.
The departure of Davutoglu "will allow Erdogan to distance himself from some of his failed policies that can be attributed to Davutoglu", added Keyman.
Erdogan - who already controls both the army and parliament - is expected to benefit from the latest move, described as a "hollowing cut" by Soner Cagaptay, director of the Turkish Research Program at The Washington Institute.
"It shows how much power has been massed in one person's hands," he told AFP. Erdogan was now exercising more control than anyone in Turkey's modern democratic history, he added.
After the official appointment expected on Sunday, "the post of prime minister will have changed its meaning", said Fuat Keyman, head of the Istanbul Policy Center think-tank.
"The president will become the head of the executive. The prime minister will become a functional cog," Keyman told AFP.