President-elect Donald Trump has announced that billionaire Elon Musk and Vivek Ramaswamy, a former presidential candidate and ally of Trump, will lead a new Department of Government Efficiency.

"Together, these two wonderful Americans will pave the way for my Administration to dismantle Government Bureaucracy, slash excess regulations, cut wasteful expenditures, and restructure Federal Agencies," Trump said in a statement on Tuesday.

The Department of Government Efficiency will not be a federal agency in the U.S. government but will provide advice and guidance "outside of government" and partner with the White House and Office of Management & Budget to "drive structural government reform," Trump said.

The president-elect did not detail how this new department would be funded.

"I look forward to Elon and Vivek making changes to the Federal Bureaucracy with an eye on efficiency and, at the same time, making life better for all Americans," Trump added.

Musk reacted to Trump's appointment Tuesday night on X and said a key component of the department would be transparency with the public.

"All actions of the Department of Government Efficiency will be posted online for maximum transparency," Musk said, adding, "Anytime the public thinks we are cutting something important or not cutting something wasteful, just let us know!"

Musk added that there would be a public "leaderboard" to track spending of tax dollars.

"We will also have a leaderboard for most insanely dumb spending of your tax dollars. This will be both extremely tragic and extremely entertaining," Musk said.

In his statement, Trump also said the new department would target the "massive waste and fraud" he says exists within the $6.5 trillion of government spending.

Musk, who currently oversees six companies including X, Tesla and SpaceX, is not expected to become a government employee, which would likely require him to divest from his business empire.

During the 2024 election cycle, Trump was vocal about including Musk in his administration if elected.

While speaking to the Economic Club of New York in September, Trump announced Musk would lead a task force to conduct a "complete financial and performance audit of the entire federal government" and make "recommendations for drastic reforms."

Following Trump's comments, Musk took to X, saying, "I look forward to serving America if the opportunity arises."

Ramaswamy, a biotech entrepreneur who suspended his presidential bid in January, has been a vocal advocate of Trump's campaign.

Earlier this month, Ramaswamy said the president-elect would bring the country together and urged Democrats who did not vote for him to "give him a chance."

"What you're hearing from Donald Trump is he is going to be a president for all Americans," Ramaswamy said. "I think Donald Trump is focused on what makes people's lives better. And actually, my message to Democrats out there, even those who didn't vote for Donald Trump, is to give him a chance to actually make your life better," he added.

ABC News' Kelsey Walsh and Katherine Faulders contributed to this report.