Gates, 52, one of the 20th century's most influential people, will remain chairman of the company's board of directors and its largest shareholder, but will hand over the running of the business to three people: Ray Ozzie, Craig Mundie and CEO Steve Ballmer.
Although Gates will continue to spend a day a week on Microsoft, many business analysts consider that without the man who changed the way people think about computers with his 1975-vision of a computer on every desk and in every home, the future for the software giant is uncertain.
The turning point for Gates, who coined the phrase "Be nice to nerds. Chances are you'll end up working for one," came when Microsoft signed an agreement with IBM to build the MS-DOS operating system in 1980, and by the time the company went public in 1986 he was the world's youngest billionaire at only 31.
Gate's future lies with The Bill and Melinda Gates Foundation charity organization. Set up 10 years ago, the organization works in the areas of world health care, extreme poverty and provides access to the Internet and computers for people in the third world.