The announcement by Lt. Gov. Cruz Bustamante came the morning after the secretary of state certified that the Republican-led drive to recall Davis had collected more than enough valid signatures to qualify for the ballot. Davis would be only the second governor in the nation ever to be recalled.
State law required Bustamante to set the election date 60 to 80 days from Wednesday's certification — Oct. 7 squeaks in at 77 days, the last Tuesday in the timeframe.
Bustamante said the recall election will have two parts, with voters first deciding whether or not to oust Davis and then choosing from a list of candidates to replace him.
Bustamante had thrown that scenario into question this week when he refused to say whether he would call a replacement election on the same ballot. Under that scenario, Bustamante could have become governor, at least temporarily, under the state's Constitution.
Candidates to replace Davis must now scramble to declare their candidacies and start their campaigns.
The Republican field was still uncertain Thursday, with just one candidate — Rep. Darrell Issa, who bankrolled the recall signature gathering effort with $1.7 million of his own money — definitely in the running. He planned to return from Washington as early as Thursday to begin campaigning.
Businessman Bill Simon, who lost to Davis in November, said Wednesday he would announce his plans on Saturday and state Sen. Tom McClintock formed an exploratory committee.
Actor Arnold Schwarzenegger's spokesman said the actor has not decided if he will run.
The state's Democratic officeholders have closed ranks behind Davis and say they will not run. The Green Party's Peter Camejo, who ran for governor in November, intends to run.
Candidates must declare their candidacies at least 59 days before the election.
Davis spent Wednesday night in Los Angeles and was scheduled to appear at an event with law enforcement officials there on Thursday. He is expected to continue a series of public events spotlighting programs threatened by proposed Republican budget cuts and the state's lack of a budget deal.
The state has been without a budget since July 1, with Republicans refusing to go along with Democratic-proposed tax hikes to help close the state's $38.2 billion budget deficit.
Davis has branded the Republican-led drive to oust him "a hostile takeover by the right," and said he will fight and win.
Davis allies are awaiting a ruling by the state Supreme Court after a last-ditch appeal to block the recall from making the ballot, alleging illegal signature gathering by recall backers. A spokeswoman said the justices were considering the case on an expedited basis.
Both sides were preparing for a bruising and costly recall election.
Although he was elected to his first term in 1998 by a landslide, Davis' standing slipped during California's energy crisis of 2000-01. A budget crisis further eroded his popularity and he won re-election by just 5 points in November over Simon, a political novice.
The budget deficit has already caused the state's car tax to triple, and Davis' approval rating to sink into the low 20s in many polls.
But polls have also shown that many voters are concerned about the $30 million to $35 million cost of a special election, and about the prospect that a candidate could win with relatively few votes.
The last gubernatorial recall election was in 1921, when North Dakota Gov. Lynn J. Frazier was removed from office.