The agency said the crater named Gale was chosen as the target for the $2.5 billion Mars Science Laboratory mission. Gale was chosen after years of debate and input from the Mars science community.
Sixty potential sites were discussed before a short list of four was created. In May, scientists whittled the list to two - Gale and Eberswalde craters.
The chosen crater is named for an Australian astronomer, Walter F. Gale.
The 3-mile-high mountain in the 96-mile-wide Gale Crater is layered and scientists believe it is the surviving remnant of an extensive sequence of deposits. Officials also believe the site also has a huge cut likened to the Grand Canyon that appears to have been made by flowing water.
The rover, nicknamed Curiosity, will use its tools to study whether the target area ever had conditions for supporting microbial life. Curiosity is bigger than the three rovers NASA has previously sent to the red planet in search of geologic evidence that the frigid, dusty planet was once warmer and wet, with conditions that could potentially have supported a hardy form of life.
Past studies from orbiting spacecraft show the mineral signatures of clays and sulfate salts, which form in the presence of water, concentrated in older layers near the bottom of the mountain.
Scientists hope the rover will help determine what happened to the water on Mars, how it went from wet to a frozen desert where dust devils spin across the surface.
Unlike its solar-powered predecessors - Spirit, Opportunity and the 1997 Pathfinder mission's tiny rover Sojourner - Curiosity is nuclear-powered, its energy originating from a radioisotope.
The rover is expected to land on mars in August 2012.
The Associated Press contributed to this report.