The chip-maker revealed that it will be considering both internal and external candidates to succeed him over the next six months.
"Paul Otellini has been a very strong leader, only the fifth CEO in the company's great 45-year history, and one who has managed the company through challenging times and market transitions," said Intel chairman Andy Bryant in a statement.
"The board is grateful for his innumerable contributions to the company and his distinguished tenure as CEO over the last eight years."
Otellini confirmed that he will help usher in a new era at Intel during his final months and remain available in an advisory capacity post-retirement.
"I've been privileged to lead one of the world's greatest companies," he said. "After almost four decades with the company and eight years as CEO, it's time to move on and transfer Intel's helm to a new generation of leadership.
"I look forward to working with Andy, the board and the management team during the six-month transition period, and to being available as an advisor to management after retiring as CEO."
Otellini was promoted to the top job at Intel in 2005, and has since overseen the launch of the ultrabook and the release of the first tablets and smartphones with its processors inside.