Steve Jobs has resigned from his position as Apple's chief executive officer but will remain with the company as chairman of the board.
Chief operating officer Tim Cook has been named to fill Jobs' shoes as CEO.
The change was effective immediately.
Jobs has been on medical leave for an undisclosed condition since January 17. His often-gaunt appearance has sparked questions about his health and his ability to continue at Apple.
Jobs said in an open letter that Cook's appointment was part of Apple's succession plan.
He said he would continue to watch and contribute to Apple's success in his board role.
"I have always said if there ever came a day when I could no longer meet my duties and expectations as Apple's CEO, I would be the first to let you know," Jobs wrote in a letter to the Apple board [presented in full below].
"Unfortunately, that day has come."
Genentech chairman Art Levinson, speaking on behalf of Apple's Board, said Jobs had "saved Apple".
"Steve has made countless contributions to Apple's success, and he has attracted and inspired Apple's immensely creative employees and world class executive team," he said.
"In his new role as chairman of the board, Steve will continue to serve Apple with his unique insights, creativity and inspiration."
The Apple board put their support behind Cook as Apple's new CEO.
"The board has complete confidence that Tim is the right person to be our next CEO," Levinson said.
Cook had been with Apple for 13 years. He was previously responsible for the company's worldwide sales and operations, including the management of Apple's supply chain, sales activities, and service and support in all markets and countries.
Analysts do not expect Jobs' resignation -- which had long been foreseen -- to derail the company's fabled product-launch roadmap, including possibly a new iPhone in September and a third iteration of the iPad tablet in 2012.
"I will say to investors: don't panic and remain calm, it's the right thing to do. Steve will be chairman and Cook is CEO," said BGC Financial analyst Colin Gillis.
Cross Research analyst Shannon Cross expressed confidence in the Apple bench, headed by long-time company No. 2 and supply-chain maven Cook.
"Investors are very comfortable with Tim Cook even though Jobs has been a driver of innovation and clearly an Apple success,” Cross said. “Tim has shown Apple can still outperform extremely well when he's been acting as CEO.
"I don't know if it's a health issue. I don't know if it is a shock. Most likely it was going to happen at some point. Why today versus another day? I don't know."
Others called it the end of an era.
“He’s the greatest entrepreneur ever,” Union Square Ventures principal Fred Wilson said.
Apple shares dived as much as seven percent in after-hours trade.
No product changes expected
Ovum consumer IT analyst Tim Renowden said Jobs’ resignation was “not really a surprise” given his well-publicised health problems.
“He effectively stepped down from the role from the beginning of this year,” Renowden said.
Although Apple’s share price was showing “a bit of panic”, Renowden believed Tim Cook’s performance in the first half of this year to have been “solid”.
“There’s no reason to doubt he’ll [Cook] continue to be a solid leader,” Renowden said.
“I think it’s important that Jobs takes that role as chairman just to provide a bit of certainty and continuity to the leadership.
“It’s difficult to know how active that role will be but I think it’s important to have that figurehead there.”
Renowden did not expect dramatic changes to Apple’s product roadmap or strategy over the next couple of years.
“Beyond that I think it’s just a matter of wait and see but I don’t think there’s any particular reason to panic,” he said.
To the Apple Board of Directors and the Apple Community:
I have always said if there ever came a day when I could no longer meet my duties and expectations as Apple’s CEO, I would be the first to let you know. Unfortunately, that day has come.
I hereby resign as CEO of Apple. I would like to serve, if the Board sees fit, as Chairman of the Board, director and Apple employee.
As far as my successor goes, I strongly recommend that we execute our succession plan and name Tim Cook as CEO of Apple.
I believe Apple’s brightest and most innovative days are ahead of it. And I look forward to watching and contributing to its success in a new role.
I have made some of the best friends of my life at Apple, and I thank you all for the many years of being able to work alongside you.
(Additional Reporting by Poornima Gupta and Edwin Chan; Editing by Gary Hill)