McGrattan, 57, will replace Bishop Nicola De Angelis, who offered his resignation to the Pope upon reaching age 75, as required by Canon Law.
McGrattan has been an auxiliary in Toronto since he was ordained a bishop in 2010.
“I am humbled by the confidence entrusted to me by Pope Francis," McGrattan said in a press release. "I wish to express my gratitude to all those whom I have encountered in my ministry over the past four years as auxiliary bishop in the Archdiocese of Toronto.
"I thank Cardinal (Thomas) Collins for his guidance and counsel, the hundreds of clergy and religious who serve so faithfully each day and the dedicated parishioners of the archdiocese. It has been inspiring to witness faith alive and at work in one of the most diverse faith communities in North America."
Collins thanked McGrattan for his service in Toronto, particularly for his work on the archdiocese's Pastoral Plan that was released last year.
"While he will be dearly missed, we pray for him as he embarks on a new assignment, offering his many gifts and talents to the faithful of the Diocese of Peterborough," Collins said in a news release.
No date has been set yet for McGrattan's installation in Peterborough. De Angelis, the Peterborough bishop for 12 years, will serve as Apostolic Administrator in the diocese until McGrattan's installation.
"On behalf of the faithful and the clergy of this diocese I welcome the new shepherd, Bishop McGrattan, and assure him of the prayers and loving support of those who wonderfully make up this diocese," De Angelis said in a release.
McGrattan, a London, Ont., native, was ordained to the priesthood in 1987 and initially served in parish ministry in Chatham, Ont. He then earned his Licentiate in Fundamental Moral Theology from the Pontificio Universita Gregoriana, Rome in 1992.
Returning to London, he taught theology and eventually served as vice rector and dean of Theology at St. Peter’s Seminary. He became rector in 1997 and in November 2009 was appointed an auxiliary bishop of Toronto by Pope Benedict XVI. His episcopal ordination took place Jan. 12, 2010.
In Toronto, McGrattan managed the 71 parishes of the central region of the archdiocese and served as vicar for Ethnic Pastoral Councils and Lay Movements. He also serves on numerous committees at both the provincial and national level.