The decision was taken following a meeting of the Bharatiya Janata Party (BJP) parliamentary board which was attended, among others, by party president Rajnath Singh and senior leader L.K. Advani.
Harsh Vardhan, 59, was elected from Krishna Nagar constituency in east Delhi for the first time in 1993 and went on to retain that seat in the 1998, 2003 and 2008 assembly elections.
An ENT surgeon by profession, he is married to Nutan, a specialist in hospital administration. He has two sons and a daughter.
"The central parliamentary board has unanimously decided to project Dr. Harsh Vardhan as the BJP's chief ministerial candidate for Delhi elections," Rajnath Singh told reporters after the meeting.
Rajnath Singh said Goel has accepted Harsh Vardhan's candidature.
Goel Sunday met senior BJP leaders to stake his claim as the party's chief ministerial candidate.
According to media reports, he had threatened to resign from his post if Harsh Vardhan was projected as the chief minister.
Harsh Vardhan, 59, held portfolios of state education, law and health minister in the BJP government in Delhi.