Councillor Alan Mosley has handed over the reins to Councillor Julia Buckley, who was elected to the council in Bridgnorth's West and Tasley ward last year.
Councillor Buckley had previously contested the Shrewsbury & Atcham seat at the 2019 General Election.
The move was confirmed at a meeting of the nine-member Labour Group this week.
Councillor Mosley, who represents Castlefields and Ditherington in Shrewsbury and is leader of Shrewsbury Town Council, said the new leader had the talent and drive to take on the council's Conservative administration, while Councillor Buckley said she would be working to show Labour's vision for the county.
Councillor Mosley said: "Having been leader of Shropshire Council’s Labour Group for over 10 years I announced some time ago that it was time to hand over the role following the May 2021 elections.
"So, I was delighted that Julia Buckley gained a stunning victory in Bridgnorth in May and accepted the proposal that she take over in due course.
"The time is now right to hand over and I look forward to working with her and giving my full support to her and other excellent colleagues in the group, given the challenges which lie ahead.
"Many will already know of Julia’s highly effective campaigning for residents across the county and she showed tremendous talent and drive when standing for Parliament in the Ludlow Constituency in 2017 and then Shrewsbury and Atcham in 2019.
“Obviously my time as leader has been dominated by the fight against the national attack on local government and public services, at first by mounting opposition to the cuts by the Lib Dem/Tory Coalition and then by fighting Tory Government's intent on austerity and privatisation.
"I have opposed four different Tory leaders at Shropshire Council who have displayed varying degrees of incompetence and all of them highly intent on supporting their Tory Government at election time.
"I will continue to oppose malevolent forces and promote progressive policies on behalf of all residents in Castlefields and Ditherington, Shrewsbury and Shropshire and do so as stridently and as often as I have done in the past, though now from the backbenches, and I will have a little more time to give to other pursuits.”
Councillor Buckley said: “I have enjoyed my six- month apprenticeship with Councillor Alan Moseley, to whom I owe a debt of gratitude for his strategic and visionary approach.
"And as we start the new year I am delighted to take on the role of leader of the Shropshire Labour Group.
"I look forward to working closely with all our members across Shropshire, to showcase the excellent work of our Labour team.
"We strive to support residents as they suffer the harsh reality of this Conservative administration’s callous cuts.
"Working in partnership with Alan, in his vital role as Leader of Shrewsbury Town Council, we will continue to demonstrate Labour’s alternative vision for a thriving Shropshire.”