The announcement came on the same day that Libyan strongman Moammar Gadhafi challenged the no-fly zone, only to see one of his few remaining planes destroyed by a French jet.
In acknowledging the transition to a NATO command, Secretary of State Hillary Clinton this evening highlighted the successes of the no-fly zone's initial U.S.-led phase.
"After only five days, we have made significant progress," she said. "A massacre in [the Libya rebel stronghold of] Benghazi was prevented. Gadhafi's air force and air defenses have been rendered largely ineffective. And the coalition is in control of the skies above Libya."
NATO Secretary-General Anders Fogh Rasmussen waited to announce the new NATO role until every one of the 28 NATO members agreed to have NATO take over management of the no-fly zone.
Turkey, the only predominantly Muslim NATO member, agreed to the switchover today, according to The Associated Press.
Non-NATO members also are expected to take part in the enforcement action, including members of the Arab League.
"This evening, the United Arab Emirates announced they are joining the coalition and sending planes to help protect Libyan civilians and enforce the no-fly zone," Clinton said. " We welcome this important step. It underscores both the breadth of this international coalition and the depth of concern in the region for the plight of the Libyan people."
Qatar is another Arab nation that reportedly will contribute assets to the operation.
The no-fly zone order will go from the NATO Council to Adm. James Stavridis, NATO supreme allied commander, on down the chain to the component commanders.
On Wednesday, NATO announced it was taking responsibility for enforcing the naval arms embargo for Libya.
The United States will remain part of Operation Odyssey Dawn, but will have limited participation, Africa Command's Gen. Carter F. Ham told ABC News in an exclusive interview. The U.S. will contribute tankers and personnel recovery teams, he said.
"The phrase that we use is that the United States will contribute its unique military capabilities to whatever this second phase of operation would be," Ham said. "There's probably some intelligence support that we would continue to provide, some communications, tankers for aircraft. ... But we wouldn't see probably a large number of fighter aircraft for example."
Ham said he's confident the command can be handed over "relatively quickly" but "there are frankly some mechanical and procedural pieces -- particularly with regard to the air operations -- which are very, very complex" that may take a longer while to transition.
Some allies only want to enforce a no-fly zone but not protect civilians, which would entail firing on ground forces, Ham told ABC News. Coalition forces are sorting out details, he said.
Gadhafi's challenge to the no-fly zone ended quickly today, said the French government. Gadhafi forces sent a warplane over the city of Misrata, where it was quickly destroyed by French fighter jets.