Lee Young-ha, president of LG's home appliances division, will be replaced by its head of overseas marketing, Shin Moon-bum, an LG spokesman said.
Park Jong-seok, who has been leading LG's mobile division since late last year, will stay in his role.
The world's No.3 handset maker declined to elaborate on the changes.
A source with knowledge of the matter said LG, which recently released new smarpthones running on faster fourth-generation mobile networks, hopes its current management will continue to focus on the new technology and turn the business around next year.
Lee of the home appliances unit, however, was replaced as the division's performance failed to live up to expectations, the source said.
LG's handset business has reported nearly 1 trillion won($873.2 million) in losses over the last six quarters, as it has failed to introduce compelling models to challenge the likes of Apple Inc and Samsung Electronics Co.
Koo Bon-joon, the younger brother of the LG Group chairman and a member of its founding family, took over as CEO of LG Electronics in October last year to rescue the troubled mobile division.
But he failed to restore its profitability and LG announced a $945 million cash call earlier this month mainly to finance a revival of its smartphone business.
Its global handset market share shrank to 5.4 percent in the third quarter from 8.3 percent a year ago, while its flagship Optimus line of smartphones failed to gain major traction.
Under the restructuring announced on Wednesday, LG also created the role of chief operating officer but has yet to name an executive to the post.
By 0420 GMT, shares of LG rose 1.1 percent versus a 0.8 percent drop in the wider market. ($1 = 1145.2500 Korean won)
(Reporting by Miyoung Kim; Editing by Jonathan Hopfner)
Posted by Jason Lomberg, Technical Editor