by Patricia Sellers

Dawn Hudson spent more than a decade chasing stretch goals at PepsiCo . She headed sales and marketing at Frito-Lay, the consumer giant’s snack unit. She led marketing at Pepsi-Cola North America and ascended to CEO of that $5.5 billion business.

That job turned out to be Hudson’s ceiling inside PepsiCo, where chairman and CEO Indra Nooyi has put her own stamp on the company. Hudson (who ranked as high as No. 41 on Fortune‘s Most Powerful Women list in 2007) left Pepsi in January of last year. Since then, headhunters and others have wondered what big job she’ll land next.

It took Hudson 14 months–of silence, self-reflection, and ducking press inquiries—to decide that her new gig will be at….drum-roll…a firm you might not have heard of: the Parthenon Group, a Boston-based strategic advisory outfit. She’ll be vice chairman, working just three days a week.

What gives? Like a lot of women–and men too lately–who have come close to reaching a pinnacle in business, Hudson, 51, decided that shooting for bigger and bigger jobs is simply too stressful. And not worth the price.

“I was neglecting life,” she says about her time in the Pepsi pressure-cooker. “It took six months for me to realize that there’s some great life out there to be lived.”

Not that she’s idled these past 14 months. She serves on the boards of Lowe’s, the home-improvement retailer, and Allergan, whose restorative medical products range from breast implants to Botox to Refresh eye drops. Hudson got her own shot at reinvention as soon as she exited Pepsi: She stepped up to chair the LPGA–and then whittled her golf handicap to 12, from 15.

A serious athlete ever since her Dartmouth days, Hudson played in five competitive tennis leagues and a golf league–yes, simultaneously–at one point during her time off. “I transferred my 24/7 work ethic to sports,” she says, adding that she paid for it. She developed plantar fasciitis, or heel spurs. “I played through it.”

Her onetime boss, former PepsiCo CEO Roger Enrico, gave her the best advice about rerouting her career: “Roger said, ‘Whatever you do, you’re going to do passionately. So make sure you join a group of people who you really want to spend time with.'”

And Ann Fudge, a former top exec at Kraft Foods who later headed Young & Rubicam Brands (and now sits on the General Electric board), was also helpful. “As her career progressed, she fought the urge to overload herself at the expense of her family and personal time,” Hudson says. “Ann told me that you have to follow your gut, take a deep breath, make the call to say no to something. And if it turns out to be the right call, you’ll wake up in the morning with a great sense of relief and satisfaction.”

That’s what Hudson did–but only after considering opportunities in consumer goods and retail. She says she came close to taking the top job at one large company owned by private equity. “But then I thought, what’s really going to be different this time?”

Parthenon appeals to her, she says, because she’ll have the chance to work with lots of companies in lots of areas–strategy, marketing, IT–and reach beyond business too. Parthenon has a philanthropy practice, and she plans to help the firm build a sports practice as well. She’ll start at Parthenon in a month or so. First things first: She promised to take her 11-year-old daughter (the younger of two) skiing in Colorado, and she’s taking “a mystery trip” with her husband, Bruce Beach, who wants to surprise her. (She’ll find out where the trip is when she gets there.)

So much for Hudson’s spot on Fortune‘s Most Powerful Women list. Does she care? Hardly. “I’m in control now,” she says. “It’s a different definition of power.”P.S. Hudson perpetuates the trend: Powerful women are opting out. Procter & Gamble president Susan Arnold quit her post two weeks ago, one day after she turned 55. Arnold needs to “decompress,” she told me, before she even thinks about what to do next. Former eBay Meg Whitman left business to run for governor of California. (She’s hardly decompressing, though! Read my current Fortune cover story.)

And three execs who used to be the most powerful women on Wall Street–Citigroup’s Sallie Krawcheck and Morgan Stanley’s Zoe Cruz and Ellyn McColgan–are all without jobs now, while Erin Callan, the Lehman Brothers’ CFO who landed at Credit Suisse, is taking a leave of absence–supposedly to ease her stress. What do YOU think? Will women rise again when the business world gets out of crisis?