A LEGO spokesman said Christiansen, who left engineering company Danfoss at the end of June, after leading the company for nine years, was the "perfect match" for the Chief Executive job at LEGO.
Padda was appointed as the CEO of LEGO less than a year ago after former chief Knudstorp gave up the position to head up the new LEGO Brand Group umbrella company.
Speaking to the Financial Times, LEGO Chairman Jorgen Vig Knudstorp explained that Bali Padda has always been meant to be in the role for an interim period due to his age, with Niels Christiansen being a decade younger.
Mr Knudstorp says he started looking for a younger successor to Mr Padda, who is the oldest person on the Lego management team, immediately after his appointment, but admitted that the transition had come faster than expected.
Christiansen said he was honored to join the company. Padda has been moved to a "special advisory role" at the LEGO Brand Group. Both Bali and I thought it would take a long time as it's not a trivial matter.
"I was just very fortunate that, relatively early, we found the right person", Knudstorp said.
He resigned from Danfoss in March, saying it was time for a new challenge, and Mr Knudstorp said that speeded up the process for Lego.
"It could easily have taken two to three years", he said, adding that while it was not essential to have a Dane leading Lego, it was important to understand its roots.