The change in position will be effective January 2018.
"Since 2001, Eric has provided us with business and engineering expertise and a clear vision about the future of technology," Larry Page, CEO of Alphabet, said in a statement. "Continuing his 17 years of service to the company, he'll now be helping us as a technical advisor on science and technology issues."
"I'm incredibly excited about the progress our companies are making, and about the strong leaders who are driving that innovation."
The release adds that the Alphabet board "will appoint a non-executive chairman."
In response to the news, Schmidt released a statement saying that he "can't wait to dive into the latest science, technology, and philanthropy."
— Eric Schmidt (@ericschmidt) December 21, 2017
Schmidt spent a total of 10 years as the company's CEO and seven as the executive chairman.
The 62-year-old software engineer was brought onto Google in 2001 by founders Larry Page and Sergey Brin as the search engine giant's chief executive. He later took up the role as Alphabet's executive chairman in 2011.