In a surprise move, Google co-founder Larry Page will replace Eric Schmidt and take over as Chief Executive Officer in April.
Schmidt, 55, who became CEO in 2001, will assume the role of Executive Chairman, focusing externally on "deals, partnerships, customers and broader business relationships, government outreach and technology thought leadership, according to the official Google blog spot.
Schmidt would continue to act as an advisor to Page and co-founder Sergey Brin.
"Page will take charge of Google's day-to-day operations as Chief Executive Officer, starting April 4. Brin will focus on strategic projects, in particular working on new products," Schmidt said in the blog spot.
The management reshuffle has been brought about to "streamline decision-making and create clearer lines of responsibility and accountability" at the top of the company, he added.
He said as Google has grown, managing the business has become more complicated.
"We've been talking about how best to simplify our management structure and speed up decision making for a long time. By clarifying our individual roles we'll create clearer responsibility and accountability at the top of the company," Schmidt said.
Commenting on the management change, Page said: "Eric has clearly done an outstanding job, leading Google for the last decade...we are only at the beginning and I can't wait to get started."
Page takes over Google at a time when it is facing competition from social networking site Facebook, which has more than half a billion users since it was founded in 2004. Google also faces competition in mobile advertising from Apple Inc.
The management change comes as the California-based internet search giant reported a net profit of $2.54 billion in the fourth quarter ended December 2010, up 29 per cent from $1.97 billion a year earlier.
Google reported revenues of $8.44 billion for the quarter ended December 31, 2010, an increase of 26 per cent compared to the fourth quarter of 2009.
"Our strong performance has been driven by a rapidly growing digital economy, continuous product innovation that benefits both users and advertisers and by the extraordinary momentum of our newer businesses, such as display and mobile," Schmidt said.
Google employed 24,400 full-time employees as of December 31, 2010, up from 23,331 full-time employees as of September 30, 2010.