The electronics giant and Xbox firm has announced that CEO Steve Ballmer will retire within the next 12 months.
Ballmer will retain his position until a successor is chosen, after which he will leave Microsoft.
"There is never a perfect time for this type of transition, but now is the right time," he said.
"We have embarked on a new strategy with a new organisation and we have an amazing senior leadership team.
"My original thoughts on time would have had my retirement happen in the middle of our companys transformation to a devices and services company. We need a CEO who will be here longer term for this new direction."
Chairman of the Board and Microsoft co-founder Bill Gates added: "As a member of the succession planning committee, I'll work closely with the other members of the board to identify a great new CEO.
"We're fortunate to have Steve in his role until the new CEO assumes these duties."
Ballmer became CEO of Microsoft back in January 2000.