Mrs Clinton broke the news in a tweet to her supporters. She plans a formal announcement on Saturday.
Mrs Clinton passed over more left-leaning candidates in favour of the 58-year-old senator who opposes abortion and supports free-trade agreements.
His home state of Virginia is a major battleground in the coming election.
Who is Tim Kaine?
Mr Kaine also speaks fluent Spanish and could help the Clinton campaign maintain its support among Hispanic Americans – a growing voting bloc.
An experienced politician who has been toughly vetted, he is considered a “safe” choice for the vice-president slot.
Mr Kaine was a finalist to be Barack Obama’s running mate in 2008 and served as Virginia governor before his time in the Senate.
Mrs Clinton also reportedly interviewed liberal firebrand Senator Elizabeth Warren of Massachusetts and Senator Cory Booker, an African-American senator from New Jersey.