"As Satya Nadella becomes the third CEO of Microsoft, he brings a relentless drive for innovation and a spirit of collaboration to his new role," Microsoft said.
Nadella is only the third CEO in Microsoft's 39-year history, following co-founder Bill Gates and Ballmer.
Nadella was earlier heading the company's cloud and enterprise business. He has been with Microsoft for 22 years. While in his earlier responsibility he looked after a division that had $19 billion annual revenue, the post of Microsoft CEO is a big step up for him.
The company generates around $78 billion in a year and is currently facing a number of challenges in the market where Apple and Google have emerged more exciting and innovating technology companies.
Nadella completed his engineering degree from Manipal University before heading to the US for higher studies. He joined Microsoft in 1992.
Microsoft also announced that John Thompson, lead independent director, will succeed Gates as chairman. Gates will assume a new role as "technology advisor," the company said in a statement.
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