The move to elevate Shahbaz in rank was seen as an attempt to continue the dynastic political system, which has been opposed by critics.
Shahbaz, 66, is currently serving as the chief minister in Punjab province. He has built a reputation as a competent administrator who gets things done, especially mega projects that are the cornerstone of the party’s electoral appeal.
Shahbaz’s election is likely to prompt speculations that he will replace Shahid Khaqan Abbasi as prime minister if the party sweeps back to power after general elections due in the summer.
Nawaz resigned in July after the country's top court ousted him from office for concealing financial assets. The Supreme Court's decision last week effectively bars Sharif from leading the PML-N.
In the court order, Chief Justice Mian Saqib Nisar on February 21 directed the Election Commission of Pakistan to remove Sharif as head of the PML-N from all relevant records.
Nawaz could end up in jail if he is convicted in a separate corruption trial expected to take place soon.
Sharif was the 15th prime minister in Pakistan's 70-year history to be ousted before completing a full term.
Sharif has served as prime minister twice before and each time was removed from office, in 1999 by a military coup and 1993 by presidential order.
