The Cabinet-level office will coordinate the FBI, CIA and 40 other federal bureaus to protect the United States from future terrorist attacks.
Bush appointed Tom Ridge, Pennsylvania's Republican governor, to oversee the office.
"He will lead, oversee and coordinate a comprehensive national strategy to safeguard our country against terrorism, and to respond to any attacks that may come," Bush said of Ridge's duties during an address to Congress last week.
Ridge was considered as a potential vice presidential candidate by both George W. Bush and former presidential candidate Bob Dole in the 1996 election.
He served as a Pennsylvania Congressional representative for five terms and had a mostly moderate voting record.
Bush is not the first president to create a Cabinet-level position to specifically deal with a national crisis.
While the new office seems to have the approval of Congress and the public, the post may be subject to future scrutiny.
"This appointment indicated that the people in the United States have to forgo certain liberties and practices, like search and seizure in the airports," said Bill Sabo, political science professor at UNC-Asheville.
"In the long run it will heighten the controversy surrounding the choice or the trade-off between individual liberties and some notions of increased security and law and order."