Ives, 34, currently is crew chief for rookie Chase Elliot in NASCAR's second-level Nationwide Series for the team JR Motorsports, which is owned by Earnhardt in partnership with Hendrick.
Before joining JR Motorsports in late 2012, Ives had been race engineer for Hendrick's
"Greg was our No. 1 choice" for Earnhardt and his No. 88 Chevrolet, team owner Rick Hendrick said in a statement. "This is a talented guy who already has a terrific rapport with Dale Jr. and is a fit with the organization."
Letarte announced in January that he planned to leave after this season to become a NASCAR television analyst. He then helped Earnhardt win the season-opening Daytona 500 and another victory at Pennsylvania's Pocono Raceway in June.
Because Earnhardt is enormously popular among fans and is having a strong season, Hendrick's choice to replace Letarte was being closely watched in NASCAR Nation.
"I know what Greg is about and really respect him," Earnhardt said in a statement. "He's a strong leader with a cool personality, and we're both competitors who want to win."