Yang co-founded Yahoo 13 years ago with David Filo and took over as CEO in June 2007 at the request of the board. He announced Tuesday evening that he will return to his role as "Chief Yahoo" and board member once a successor is named.
He wrote in a company blog post that he fulfilled a role to restructure and reorganize the company, and he has been discussing plans with the board for a successor. He said it's time for a new leader "who will build on the important pillars we've put in place and who will take the reins on the critical decisions our company faces."
"I'll go back to focusing on our global strategy, product excellence, technology innovation, and working with the board and our executive team to help Yahoo realize its full potential," Yang said in the statement.
He praised the company's "tangible progress," despite a "tough external environment." Yang's tone reflected his passion for the company, which some analysts have seen as an impediment to an acquisition deal with Microsoft that many believe could have helped turn the company around.
"It's been an extraordinary year here," he said. "I'm really proud of the determination and resilience of Yahoos around the world who are so committed to giving you the best Internet experience possible. It is for them, and for you, that I will always bleed purple."
His list of successes included rewiring the network so it's open to outside publishers and developers, launching an ad platform he says could transform how ads are bought and sold online, and increasing Yahoo's audience. He said the company's ranking as first or second in more than 20 product categories shows users prefer it as a source of information about major events like the Olympics and the elections.
The company has lost about 60% of its value since last year and has failed to bridge the gap between itself and Google.
As Yahoo moves forward, it must balance the need to reassure investors and employees by naming a replacement against the need to select that replacement carefully. In addition to finding a new CEO, the company also has to find a way to survive and decide whether to do that independently or through a deal. Yahoo's next CEO selection could signal which direction the company is likely to go.