As part of the reshuffle, Schmidt will become the executive chairman. Schimdt said the changes where to "simplify" management structure and "speed up decision making".
He said: "By clarifying our individual roles we'll create clearer responsibility and accountability at the top of the company."
The search-giant said Schmidt will be focusing on deals, partnerships, customers and broader business relationships in his new role, which he assumes on 4 April.
Schmidt became chief executive in 2001, leading the company alongside its co-founders Larry Page and Sergey Brin. Schidmt will continue to act as an advisor to them both, with Brin focusing on strategy and new projects.
Page said: "Eric has clearly done an outstanding job leading Google for the last decade. The results speak for themselves.
"There is no other CEO in the world that could have kept such headstrong founders so deeply involved and still run the business so brilliantly."
Google reported revenues of $8.4bn (£5.3bn) for the quarter ended 31 December 2010, up 26% from the same quarter last year, as it benefited from a surge in online sales in the led up to Christmas.
Net income for the quarter rose to $2.5bn (£1.6bn), up from $2bn (£1.3bn) a year earlier.
Google-owned sites generated revenues of $5.6bn, 26% of total revenues, which is up 28% compared to the previous year.
Google's Adsense program, an application that allows online publishers to automatically post relevant ads on their site, also showed strong growth for the quarter. The company reported that 30% of its revenues came from its partner sites through the program, representing a 22% increase from last year.
Revenues from outside of the US account for just over half of the company's total revenue, at $4.38bn. The UK represented 10% of total revenues, down slightly from the fourth quarter of 2009 when they accounted for 12%.
Schmidt said: "Our strong performance has been driven by a rapidly growing digital economy, continuous product innovation that benefits both users and advertisers, and by the extraordinary momentum of our newer businesses, such as display and mobile.
"These results give us the optimism and confidence to invest heavily in future growth investments that will benefit our users, Google and the wider web."
Despite glowing results, Page steps up to the role in what will prove to be a tough year for the company as it undergoes an antitrust probe commissioned by the EU.