By appointing Pischetsrieder, who has served as chief executive of both BMW and Volkswagen, the foundation seeks to address long-standing concerns over its board's composition and whether it is fully qualified to fulfill it role as the largest investor of one of Germany's biggest industrial groups.
The foundation's board is currently mainly made up of academics and politicians.
The foundation owns a 21 percent stake in Thyssenkrupp and holds two seats on the conglomerate's 20-person board.
"The committee is appointing a seasoned executive with comprehensive industrial competence," the foundation said in a statement. "The board thereby complements its strong economic expertise."
Thyssenkrupp is undergoing one of its largest-ever restructurings, aiming to spin off its capital goods businesses - elevators, car parts and plant engineering - into a separate entity.
Pischetsrieder, 70, currently chairs the supervisory board of Munich Re, where Ursula Gather, the Krupp foundation's chief, also holds a seat.
Pischetsrieder was CEO of BMW in 1993-1999 and CEO of VW from 2002-2006 before he lost the support of influential labor leaders who stifled his reform efforts.
He also sits on the supervisory board of carmaker Daimler. His appointment at the foundation will expand its board of trustees to 12 members.
(Reporting by Christoph Steitz; editing by Thomas Seythal and Susan Fenton)
