Buffett, 94, said on Saturday he will recommend to Berkshire Hathaway's board that Greg Abel should become CEO at the end of the year.
"I think the time has arrived where Greg should become the Chief Executive Officer of the company at year end," Buffett said.
Abel has been Buffett's designated successor for years and he already manages all of Berkshire's non-insurance businesses.
But it was always assumed that he wouldn't take over until after Buffett's death.
Previously the 94-year-old investor has always said he had no plans to retire.
Buffett announced the news at the end of a five-hour question and answer period and didn't take any questions about it.
He said the only board members who knew this was coming were his two children, Howard and Susie Buffett.
Abel, who was sitting next to Buffett on stage, had no warning.
Many investors have said they believe Abel will do a good job running Berkshire, but it remains to be seen how good he will be at investing Berkshire's cash.
Buffett also endorsed him on Saturday by pledging to keep his fortune invested in the company.
"I have no intention — zero — of selling one share of Berkshire Hathaway. I will give it away eventually," Buffett said.
"The decision to keep every share is an economic decision because I think the prospects of Berkshire will be better under Greg's management than mine."
Thousands of investors in the Omaha arena gave Buffett a prolonged standing ovation after his announcement in recognition of his 60 years leading the company.
Buffett earlier warned that US President Donald Trump's tariffs were harmful.
Buffett said Trump's trade policies have raised the risk of global instability by angering the rest of the world.
"We should be looking to trade with the rest of the world. We should do what we do best and they should do what they do best," he said.
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