Callanan was elected at the group's annual elections in a three-way run off after receiving more than half of the votes of the 24-strong delegation.
Responding to the result, Baroness Warsi, Co-Chairman of the Conservative Party, said:
"Congratulations to Martin on being elected to lead the Conservatives in the European Parliament.
"Under his leadership, we hope that the delegation will continue its good work in the European Parliament, effectively representing the UK and working towards a more open, accountable and democratic EU."
Callanan replaces Timothy Kirkhope, MEP for Yorkshire and the Humber, who decided to stand down. Giles Chichester, MEP for the South West, was elected as Deputy Chairman. Syed Kamall, MEP for London, remains as Treasurer of the group.
Speaking after the vote, Martin Callanan said:
"I am delighted and honoured to have won the support of my colleagues to lead the Conservatives in the European Parliament. I would also like to thank my predecessor for his efforts over the last couple of years in what has been a challenging and exciting time for Conservative MEPs.
Conservative MEPs sit as members of the European Conservative and Reformists (ECR) parliamentary group. The group was formed following David Cameron's Conservative Party leadership pledge to set up a new centre-right group in the European Parliament that sees a non federalist future for the EU.
The ECR is the first and only mainstream group in the European Parliament that stands for a Europe of nation states and free markets - and is against the federal Europe favoured by all of the other major groupings.