FORTUNE — Andrea Jung is out as CEO of Avon, but she’ll remain a presence at the troubled cosmetics company — for now. The company announced yesterday that in 2012 it will split the CEO and chairman roles, with Jung staying on as executive chairman once her replacement is found. Her current title is chairman and CEO of Avon (AVP).

A source close to the situation says that it was Jung herself who proposed the move to the board.

Although Jung (No. 6 on Fortune’s 2011 ranking of the Most Powerful Women in Business) is one of the longest-tenured women CEOs in the world — she became chief of Avon in 1999 — she has struggled with execution in recent years. During the third quarter earnings call in October, the company was skewered by analysts, and some called directly for a management overhaul.

Jung has tried to implement two reorganizations since 2005 to turn Avon around, only to announce in the third quarter that the company would not hit its sales or operating margin targets for the year. For example, Brazil, an important market, has underperformed. The stock is down nearly 45% year to date. Citi analyst Wendy Nicholson summed up many investors’ sentiments in am October report titled, “Slashing 2012 Outlook — Hard to See It Get Worse Than This.”

The directors, who agreed to Jung’s proposal for splitting her post into CEO and chairman roles, had been feeling for some time that Jung needed more help, a source says. A doubling of Avon’s revenues under her watch had made the top job too complicated for one person, the directors believed, while the restructurings perhaps went too far in de-layering and put too much on Jung’s shoulders.

Company filings with the SEC say that once the new CEO starts, Jung will begin a two-year contract with Avon as executive chairman, with the possibility of extending. She will also help in the board’s search process. The source also said that Tom Neff of SpencerStuart will lead the search.

Beyond the financials, Avon also is undergoing two investigations by the SEC. One is an inquiry into possible bribery of foreign officials by Avon employees. The other is an investigation into whether the company improperly shared information with analysts.

In a press release Jung said noted that a “new CEO will provide a fresh lens and additional operational and executive leadership.” While the missteps on her watch may have sparked her pending departure, there’s also the simple fact that 12 years is a long time to run a company. Jung was the longest-serving female CEO of a Fortune 500 company.

Rather than promote from within, Avon said it is looking externally for Jung’s replacement. After several high-level departures over the years, there may not be anyone internally who can fill her shoes. Jung is 53, and her relative youth — she stepped into the CEO role in her early 40s — made it difficult for the Avon board to groom potential successors. Contenders figured a step up to CEO would take a long time. For instance, Liz Smith, who was Jung’s former No. 2 until 2009, grew impatient and quit to be CEO of OSI Restaurant Partners, which runs chains like Outback Steakhouse.

Jung’s influence and power extend beyond just the walls of Avon: She has been on the board of General Electric (GE) since 1998 and is the only woman on the Apple (AAPL) board.