Eric Schmidt will be stepping down as the executive chairman of Alphabet's board of directors and transitioning to technical advisor, the company announced. He will continue to serve on the company's board.

Schmidt first joined Google as CEO in 2001, back when the company only had several hundred employees, and became its executive chairman 10 years later. He maintained that role when Google restructured to become Alphabet in 2015.

"Larry, Sergey, Sundar and I all believe that the time is right in Alphabet's evolution for this transition," Schmidt said in a statement. "The Alphabet structure is working well, and Google and the Other Bets are thriving. In recent years, I've been spending a lot of my time on science and technology issues, and philanthropy, and I plan to expand that work."

A source tells CNBC that the transition has been in the works for about a year, and that board member John Hennessy, a former president of Stanford University with a long history in computer hardware and research, is a likely candidate to replace Schmidt as chairman.

Schmidt tweeted "adult supervision no longer needed," a reference to a comment co-founder Sergey Brin made on the Charlie Rose show when Google first hired him.

Tweet here

In the past several years, Schmidt has become increasingly involved in philanthropy through his own family foundation, which just launched a $25 million science fellowship, as well as Rise of the Rest, which invests in startups in middle America, and the Alliance for Southern California Innovation. He also serves as a board member of the Broad Institute, which focuses on medicine and disease prevention.

In his new role, he'll likely advise the company's urban development arm, Sidewalk Labs, its deep learning efforts, and its healthcare spin-offs, Verily and Calico.

Alphabet expects that its board will appoint a new, non-executive chairman at its next meeting in January, meaning that it will join the ranks of Apple and Microsoft as major companies with non-executive chairman.