Gates who will step down as Chairman along with former CEO Steve Ballmer, will remain on the board of directors. Mr. Gates, who for years has mainly focused on philanthropic activities, said he was thrilled that Mr. Nadella asked him to become more involved at Microsoft.
"I'll have over a third of my time available to meet with product groups, and it will be fun to define this next round of products working together," Mr. Gates said in a video message posted Tuesday.
The Wall Street Journal said that the appointment of Mr. Nadella, who is 46 years old and leads the Microsoft division that makes technology to run corporate computer servers and other back-end technology, is considered a safe choice. It comes after a lengthy search during which the company considered a long list of external and internal candidates.
Mr. Nadella, who will also join the company's board, said his selection marked a "humbling day" and vowed to reinvigorate Microsoft's role as a leader despite stiff competition in markets such as mobile devices and what the industry calls cloud services.
"Our industry does not respect tradition-it only respects innovation," he said in a letter to employees. "The opportunity ahead will require us to reimagine a lot of what we have done in the past for a mobile and cloud-first world, and do new things."