Knight, who left the helm of the $12 billion athletic shoe and clothing company on Thursday, will be succeeded by William D. Perez, head of S.C. Johnson & Son Inc., maker of Glade air fresheners and Drano drain cleaner.
Knight, 66, will remain chairman of the company's board of directors, the company said. He did not give a reason for his resignation, which is effective Dec. 28.
"I am confident that as CEO of Nike, Inc., Bill will lead Nike's extraordinary team of people to create an even bigger and better global company," Knight said in a statement.
A former University of Oregon track star, Knight founded Blue Ribbon Sports, Inc., with Bill Bowerman in 1968. Knight's first shoes, which he sold out of the trunk of his car, had soles made on Bowerman's waffle iron. The company was renamed Nike in 1972.
Under Knight, Nike redefined celebrity-athlete endorsements, lauding stars such as Michael Jordan and Tiger Woods as emblems of the company's ethic. Along the way they've made the swoosh one of the most recognized trademarks in the world.
In September, Nike reported a 25 percent increase in first-quarter profits. The company also reported a large increase in its U.S. orders, up 11 percent to $1.4 billion — reversing a declining trend in the national shoe market over the last several years.
Knight's combined salary and bonuses for this year were nearly $3.7 million, up from nearly $2.5 million last year.
He was ranked No. 22 on this year's Forbes list of the 400 wealthiest Americans, with an estimated net worth of $7.4 billion.
Knight still owns about 28 percent of the voting shares of Nike Class B stock and 92 percent of the nonvoting Class A stock, according to filings with the Securities and Exchange Commission.
Nike has had its share of critics — including activists who brought attention to working conditions at the company's foreign factories. Nike says it has improved conditions.
Perez, 57, has been president and chief executive of S.C. Johnson since 1996. He has worked for the consumer products company for 34 years.
Perez said he would stay true to Knight's vision.
"You can feel the innovative spirit that Phil and his team inspires from product design, to retail to athlete partnerships. And I'm a strong believer in `Just Do It,"' Perez said in a statement.
Analysts said the move did not come as a complete surprise.
"It can be likened to when an Andy Grove steps aside at Intel or Bill Gates hands the reins to Steve Ballmer at Microsoft. It's somewhat the passing of the torch," said Paul Swangard, managing director of the Warsaw Sports Marketing Center at the University of Oregon in Eugene.
"I think it's a natural transition — though a rather significant one in the history of this company," Swangard said.
Perez will have a base salary of $1.35 million annually, with bonuses of up to 125 percent of his salary.