The country, which is Latin America's third largest economy, has been in recession for almost three years.
To push through his reforms, Mr Cavallo is asking Congress to grant him special powers, and he hopes to win the support of the country's legislators within weeks.
The new minister aims to impose a tax on financial transactions, which would boost the government's coffers.
Other tax changes would be designed to encourage companies to invest in their businesses.
Argentina suffers from endemic tax evasion and loses up to half of its taxes.
Job creation
Mr Cavallo also plans to cut Argentine production costs by 20% and proposes streamlining labour laws, which he says "inhibit job creation".
Additionally, changes to import tariffs would make it cheaper for Argentine businesses to import machinery and raw materials.
However, imported goods would be made more expensive to protect domestic manufacturers.
Economists and analysts gave the plan a mixed welcome.
Unions protest
The country's trade unions, however, are still distinctly unhappy and have staged a 24-hour strike.
The country, which is Latin America's third largest economy, has been in recession for almost three years.
Mr Cavallo replaces Ricardo Lopez Murphy and is Argentina's third economy minister in as many months.
Mr Lopez Murphy resigned over the deep unpopularity of his austerity programme, which proposed $8bn of public spending cuts.
Ballooning deficit
The new minister is credited with combating hyper-inflation when he served as the country's finance chief during the early 1990s.
Unemployment in Argentina is near 15% and the country is saddled with a ballooning deficit.
In October, Argentina suffered a financial crisis that lasted for months after investors became concerned that the country would not meet its debt obligations.
A $37.9bn bail-out package by the International Monetary Fund in December was designed to help ease the country's problems.
Argentine stocks fell 7% on Thursday afternoon as rumors swirled that the country's economic crisis could lead to the resignation of President Fernando de la Rua.
The government, however, has denied the rumors, calling them "ridiculous".