Dick Costolo this afternoon announced that he is stepping down as CEO of Twitter TWTR , effective July 1.

Twitter co-founder and chairman Jack Dorsey will serve as interim CEO as the company searches for Costolo’s replacement. Dorsey also will continue to serve as CEO of Square, the electronic payment company he co-founded in 2009, and will not receive any direct compensation from Twitter for his interim CEO activities.

Costolo was named CEO of Twitter in 2010, replacing co-founder Evan Williams (who happened to replace Dorsey). Twitter stock is up sharply in the aftermarket on news of the CEO switch.

No other senior executives appear to be leaving yet, which suggests that chief financial officer Anthony Noto will have an increased operational role (at least de facto) while the CEO search is ongoing. That opportunity could open the door for Noto to become Costolo’s ultimate successor, although Twitter’s board may be hesitant to pick someone who spent almost all of his career as a banker, rather than as a technology company executive. Another strong internal candidate is Adam Bain, Twitter’s global president of revenue, who also will have increased responsibilities.

It also should be interesting to see how the CEO shift affects the ever-present rumors that Twitter will be acquired by a company like Google GOOG or Yahoo YHOO . On the one hand, the deal has suddenly gotten more expensive based on this afternoon’s stock surge. On the other, there is a leadership void that could make the board much more willing to sell.

Costolo is not expected to receive severance as part of his departure. He currently holds the equivalent of more than 8 million shares of Twitter stock, the total value of which has appreciated more than $14 million as of one hour after the original resignation announcement.