"As Satya Nadella becomes the third CEO of Microsoft, he brings a relentless drive for innovation and a spirit of collaboration to this new role," Microsoft said in a statement. (Agencies)
Nadella, 46, is taking over at a time when the world's largest software company is expanding its focus to devices and cloud infrastructure.
"The opportunity ahead for Microsoft is vast, but, to seize it, we must move faster, push harder and continue to transform," Nadella said in the statement.
"During this time of transformation, there is no better person to lead Microsoft than Satya Nadella," Microsoft founder and former Chairman Bill Gates said.
Gates said that Nadella is a proven leader with hard-core engineering skills, business vision and the ability to bring people together.
"His vision for how technology will be used and experienced around the world is exactly what Microsoft needs as the company enters its next chapter of expanded product innovation and growth," Gates said.
Formerly Executive Vice President of the Cloud and Enterprise Group at the software giant, Nadella was leading the development of one of the largest cloud infrastructures in the world.
Gates will assume a new role as Technology Advisor and devote more time to the direction of the company's products and technology.
In August last year, while launching its search for a new CEO, its then chief executive Steve Ballmer had said he will step down in the next 12 months.
"As Satya Nadella becomes the third CEO of Microsoft, he brings a relentless drive for innovation and a spirit of collaboration to this new role," Microsoft said in a statement.