Her father, Prince Bandar bin Sultan, served as the Kingdom's Ambassador to the United States from 1983 to 2005.
Prince Khalid is the younger full brother of Crown Prince Mohammed bin Salman, who is also defence minister.
While members of Congress have pursued measures to hold Crown Prince Mohammed bin Salman responsible for the killing and to cut military aid to the Saudi war in Yemen, President Donald Trump has stood by the kingdom, seeing it as a valuable Middle Eastern ally and reliable buyer of U.S. weapons.
The US envoy oversees one of Saudi's most valuable relationships, which has been strained over the murder of Mr Khashoggi, a columnist for the Washington Post, and Saudi Arabia's war in Yemen.
Trump has said he wants Washington to stand by the crown prince, despite a Central Intelligence Agency assessment that he likely ordered Khashoggi's killing - which the Saudis deny.
Princess Reema, who studied in America and is known in the kingdom for her philanthropic work, lived in the USA during her father's over 20 years as the Saudi ambassador there.
The Princess has held various leadership roles in the Kingdom and around the world including the International Olympic Committee Women in Sports Commission, as well as the Saudi Arabian Olympic Committee and the Saudi General Sports Authority's (GSA) Deputy of Planning and Development. Her appointment was the latest sign of the kingdom's effort to rehabilitate its image in the United States after USA lawmakers censured the Saudi leadership for the killing of journalist Jamal Khashoggi, the Saudi-led military intervention in Yemen, and the arrests and alleged torture of Saudi women's rights activists.
After making waves past year by removing a ban on female drivers, the Saudi crown prince has come under fire for imprisoning some of the very same activists that pushed for the reform. Prince Mohammed has held the position of defence minister even after becoming the next in line to the throne of the oil-rich kingdom.
Prince Khalid bin Salman will now be deputy minister of defense.
'I ask God to help me achieve the vision of our leadership and serve the men I know who are faithful to their religion and homeland, ' he wrote.
Bint Bandar entered the political and diplomatic arena through the business and financial portal, being a member of a number of local and worldwide advisory councils, including the Advisory Board of the Saudi National Initiative for Creativity, the Global Advisory Council of Ober and the TEDx Conference Advisory Council.
"Princess Rima becomes the first female ambassador in Saudi history and the first female with a rank of minister - a strong signal to the integration of women into the government and workforce", Ali Shihabi, founder of the pro-Saudi think-tank Arabia Foundation, said on Twitter.
Saudi Arabia has faced growing Western criticism over its airstrikes hitting markets and clinics, killing civilians.