Mr Ryan, 42, is a congressman for his home state of Wisconsin.
Ohio Senator Rob Portman and former Minnesota governor Tim Pawlenty had also been tipped to run with Mr Romney as vice-presidential candidate.
The BBC's North America Editor Mark Mardell says the decision is a bold and ideological choice.
Recent opinion polls suggest a close race between Mr Romney and President Barack Obama in November's poll, with Mr Obama tending to have a slight lead in most surveys.
Analysts say Mr Romney will be hoping to regain momentum in the campaign after a series of pro-Obama campaign advertisements attacking his record.
Mr Ryan is best-known for a controversial alternative budget which he produced to counter President Obama's plans in 2011 and 2012, known as the Path to Prosperity. » | Saturday, August 11, 2012
