Why Does God Change Jacob's Name?

After Jacob’s struggle with the Lord at Peniel, the Lord gave Jacob a new name: Israel. And God gave the reason: “Because you have struggled with God and with humans and have overcome” (Genesis 32:28). Later, God appears to Jacob/Israel again in Bethel, reaffirms the name change, and gives him the same covenant that Abraham had received (Genesis 35:9–12). Thus the “heel-catcher” became “one who struggles with God.” It was before he met with God in Bethel that Jacob purposefully put away his idols and purified himself (verse 2).

Tidbit: After the name change, some passages in Genesis refer to Jacob as “Jacob” (Genesis 33:1; 34:7; 35:15; 37:1) and others as “Israel” (Genesis 35:21; 37:3; 43:6; 46:1).

Some have suggested that the name Jacob represents his old nature and Israel his new. That is, he is called “Jacob” when functioning in his carnal old nature, but he is called “Israel” when he is acting out of his new nature. There could be limited merit in this suggestion in some passages, and it would parallel the Christian’s experience as presented in Ephesians 4:22–24.

Reference: Why did God sometimes change a person’s name in the Bible? | GotQuestions.org