Bethlehem Steel Corp. yesterday named a virtual outsider, Donald H. Trautlein to be chairman and chief executive officer.

Trautlein's appointment was viewed with surpirse by company insiders who considered him a "Long, long shot" to succeed Lewis W. Foy, who is retiring May 31. Trautlein's appointment is effective June 1.

The appointment of the new chairman was part of a major overhaul of the company's top management structure announced yesterday. In addition to Trautlein. Bethlehem President Richard F. Schubert was named a vice chairman and Walter F. Williams, currently senior vice president for steel operations, was named president.

Williams also will serve as the company's chief operating officer, a new position.

Trautlein, 53, joined Bethlehem as comptroller in 1977. He was named executive vice president of the company last year.

Before joining Bethlehem, Trautlein was a partner in the accounting firm of Price Waterhouse. In that position he was in charge of the annual independent audit of Bethlehem.

Bethlehem officials yesterday noted that Trautlein was the first finance man to head the company in many years. Recently, the top job has gone back and forth between men with either sales or operating experience.Foy was promoted from the company's purchasing ranks.

As a vice chairman, Schubert joins three other men holding that position. Bethlehem sources indicated yesterday, however, that the other vice chairman soon may be retiring. Schubert, 43, was elected president of Bethlehem just a year ago. Schubert began his career as a labor relations attorney for the company.

Schubert served as solicitor of Labor and later undersecretary of Labor during the Nixon administration.

Williams, 50, was elected a director and senior vice president for steel operations in January 1978.