Yahoo said Monday evening that Jerry Yang, its chief executive, would step down from that role after the company finds a replacement.

Mr. Yang, a co-founder of Yahoo, assumed control of the company a year and a half ago from Terry Semel, a Hollywood studio boss that he hand-picked for the job. His tenure has been a tumultuous period during which Yahoo rejected a $47.5 billion takeover offer from Microsoft and failed to cement an advertising partnership with Google.

The Microsoft offer was worth $33 a share — more than three times Yahoo’s closing price of $10.63 on Monday. The stock was up more than 4 percent in after-hours trading.

Mr. Yang, 40, helped turn Yahoo from an early directory of Web sites into a sprawling Internet giant that is used by nearly 500 million people. But shareholders have been asking whether Mr. Yang was the right man to run the company, which last month cut its sales forecast and announced plans to lay off workers.

“It’s definitely a positive from a shareholder perspective,” Ross Sandler, an analyst at RBC Capital Markets, said of Mr. Yang’s departure. “Jerry has done less than a stellar job since taking the reins from Terry Semel last year, not just completely botching the Microsoft deal, but with poor execution and multiple company restructurings that have done little to restore confidence for any of Yahoo’s shareholders, employees or customers.”

Mr. Sandler also raised the possibility that Mr. Yang’s departure could rekindle interest at Microsoft in an acquisition. Steve Ballmer, Microsoft’s chief executive, has complained that Mr. Yang had no interest in the deal. A Microsoft spokesman declined to comment.

Yahoo said in a statement that Mr. Yang would return to his earlier role as “Chief Yahoo,” a corporate visionary role, and remain on the company’s board. He will work with independent directors and Roy J. Bostock, the chairman, in the search for a new chief executive. Yahoo has also hired the executive search firm Heidrick & Struggles.

“Having set Yahoo on a new, more open path, the time is right for me to transition the C.E.O. role and our global talent to a new leader,” Mr. Yang said in the statement.

“All of you know that I have always, and will always bleed purple,” he wrote in a separate memo to his staff, referring to Yahoo’s corporate color.

A Yahoo spokesman described the decision as “mutual” and “in progress for a while.”

“Jerry and the board have had an ongoing dialogue about succession timing, and we all agree that now is the right time to make the transition to a new C.E.O. who can take the company to the next level,” Mr. Bostock said. “We are deeply grateful to Jerry for his many contributions as C.E.O. over the past 18 months, and we are pleased that he plans to stay actively involved at Yahoo as a key executive and member of the board.”

Yahoo said it would look for possible replacements inside and outside the company. Potential candidates include Susan Decker, Yahoo’s current president; Dan Rosensweig, the former chief operating officer of Yahoo who is now a principal at the investment firm Quadrangle Group; and Jonathan Miller, the former chief executive of AOL.

Mr. Yang took over Yahoo in June 2007 and, in the following months, attempted to develop a plan to help Yahoo compete against Google, the dominant company in search and online advertising. He made several major cuts in the staff. On Oct. 21, Yahoo announced it would lay off at least 10 percent of its 15,000 employees and said that its third-quarter net income fell 64 percent.

His most trying period began in February, when Microsoft made an unsolicited bid for the company. Mr. Yang initially refused Microsoft’s bid even though it was a 62 percent premium to its share price at the time. In the following months of negotiations, he showed some willingness to sell the company, but at a price that was much higher than Microsoft was willing to go. Microsoft rescinded its offer in May.

Mr. Yang then struck an advertising deal with Google that was supposed to bring Yahoo $250 million to $450 million in additional cash flow in the first year. Google would deliver ads next to some of Yahoo’s search results and on some of its Web sites in the United States and Canada.

Under pressure from regulators over antitrust concerns, Google backed out of the advertising deal earlier this month. Many analysts and investors have suggested that without the deal, Yahoo would be forced to consider one of two options: a deal with Microsoft or a merger with AOL. Yahoo and AOL, whose business has declined in recent months, have discussed a merger for months.

Claire Cain Miller contributed reporting.