Ellison, who co-founded the business software company in 1977, will remain on as Oracle’s executive chairman and take over the role of chief technology officer. He will be replaced by dual-CEOs, Safra Catz and Mark Hurd. Both are currently presidents at Oracle.

Ellison has grown Oracle into a $185 billion colossus with annual revenues of nearly $38 billion. His aggressive business tactics and sheer will-power have helped his company slice up a huge part of the business software market and placed him ranks of other tech titans like Apple’s Steve Jobs and Microsoft’s Bill Gates.

However, Oracles sales have slowed over the past three years. For most of the past 12 quarters, sales growth has been less than 5%.

His departure comes during a period of upheaval for the software industry. Cloud computing, exemplified by rival Salesforce.com, has started to make many of Oracle’s products obsolete by allowing companies to rent software, store their data with other companies and avoid costly licensing fees or hardware.

Ellison, who is famous for his elaborate antics like buying a Hawaiian island, will continue to oversee all software and hardware engineering functions.

The markets haven’t reacted favorably to the unexpected news as shares fell in extended trading.

Ellison’s leaving is a disruption that the market was not expecting, Jeffrey Sonnenfeld, a professor at Yale School of Management, told CNBC. Companies rarely make unplanned succession decisions, it is often due some kind of tumult behind the scenes, like a board battle, he said.

Catz and Hurd will continue to oversee their respective areas. All manufacturing, finance and legal teams will report to Catz, while the sales, service and global industry units will remain under Hurd.

“Safra and Mark will now report to the Oracle Board rather than to me,” Ellison said in a statement. “The three of us have been working well together for the last several years, and we plan to continue working together for the foreseeable future.”

Hurd joined Oracle in 2010 after leaving his role as CEO of Hewlett-Packard following a series of inaccurate expense reports were discovered during an investigation into sexual harassment claims. Ellison vouched for him and brought him on as the president of sales.

Catz, who joined the company in 1999, will also continue her role as chief financial officer. When she steps into her new role, she will become the 25th female CEO in the Fortune 500, bringing the number of female business leaders to an all-time high. She was also named to Fortune’s Most Powerful Women’s list Thursday in the 14th spot.