The coffee magnate, who has been with the company for more than 30 years, is credited with turning Starbucks into a global brand with name recognition comparable to McDonald’s and Coca-Cola.
The change will be effective April 3, 2017, according to a company statement.
Schultz, the company said, "will shift his focus to innovation, design and development" of its Starbucks Reserve brand products and expansion of Reserve branded locations, while also focusing on the company’s "social impact initiatives."
"As I focus on Starbucks next wave of retail innovation, I am delighted that Kevin Johnson —- our current president, coo, a seven-year board member and my partner in running every facet of Starbucks business over the last two years —- has agreed to assume the duties of Starbucks chief executive officer," Schultz said in a statement released by the company.
In a conference call on the leadership shake-up, Johnson characterized Schultz one of the "most iconic leaders and entrepreneurs" in the world.
Despite his high status in the business world, Schultz has not been discreet with his political views and in September he publicly endorsed Hillary Clinton.
Speaking to ABC News' Chief Business Correspondent Rebecca Jarvis that month, the CEO said: "I do hope that Hilary Clinton becomes president of the United States."
Asked about his own political ambitions, Schultz said that "in the last couple of years, I’ve decided that this isn’t the right time for me." However, he would not rule anything out, saying "I don’t know what’s going to happen in the future."
ABC News’ Rebecca Jarvis, Darren Reynolds and Taylor Dunn contributed to this report. The Associated Press news agency also contributed.