Moscow (CNN) -- Russia's president fired the country's defense minister Tuesday after his office became embroiled in a controversy involving alleged corrupt property deals, state media reported.
Anatoly Serdyukov, a former businessman, had been in charge of the Defense Ministry since early 2007.
Putin appointed Sergey Shoigu, a former Emergencies Minister, as the new head of defense, according to Russia's state-owned channel RT.
Shoigu, who's been serving as governor of the Moscow region since the summer, was well regarded in his role at the helm of the Emergencies Ministry, the channel said.
Russia's Investigation Committee has filed a court case against a company affiliated to the Defense Ministry, Oboronservis, over the sale of ministry properties, according to RT. Two suspects, Yekaterina Smetanova and her partner Maksim Zakutailo, are accused of aiding illegal sales.
Another suspect, Yevgeniya Vasilyeva, is thought to be a former protege of Serdyukov, RT said.
The scandal, which must be embarrassing for the Kremlin, concerns real estate scams involving nearly $100 million, according to state-owned news agency RIA Novosti.
"Given the situation that has developed around the Ministry of Defense, in order to create the conditions for an objective investigation of all the issues, I have decided to free the Minister of Defense Serdyukov from office," Putin is quoted as saying by RT.
Russia's large military is in the midst of a much-needed modernization program.
Putin urged Shoigu to push forward with the reforms, according to RT, saying he "must continue further dynamic development of the army to ensure the fulfillment of the state arms order and the immense plans of re-equipment of the army."
The appointment of Shoigu, a general, in place of Serdyukov, who was Russia's first civilian defense minister, may please senior military figures who've been unsettled by sometimes painful reforms.
The modernization program was ordered after Russia's invasion of the former Soviet republic of Georgia in 2008 revealed unexpected weaknesses in its armed forces.
CNN's Arkady Irshenko contributed to this report.