The Emir of Qatar, Sheikh Hamad bin Khalifa Al Thani, has handed over power to his son, the Heir Apparent Sheikh Tamim bin Hamad Al Thani.
In a speech broadcast on Qatari television, he said it was time for a new generation to take over.
Rumours had been circulating for days that Sheikh Tamim, 33, was preparing to succeed his 61-year-old father.
A peaceful handover is a rarity for the Gulf, where most rulers stay in place for decades, normally until they die.
Qatar-based al-Jazeera TV said Sheikh Hamad told the "ruling family and top advisers" of his decision on Monday.
Addressing the nation on Tuesday, a national holiday, Sheikh Hamad said: "I announce I am handing over power to Sheikh Tamim bin Hamad Al Thani".
"I am fully certain that he is up to the responsibility, deserving of confidence, capable of shouldering the responsibility and fulfilling the mission," he said, adding that his decision was to open the way for a "young leadership".
"Our youth have proved in recent years that they are resolute people, that they comprehend the spirit of the times and participate in it," he added.
Sheikh Hamad said he had never sought power for its own sake or for personal gain, but "for the good of the nation".
State television later showed Qataris greeting the outgoing emir and Sheikh Tamim at the royal court.
On Wednesday, both Sheikh Hamad and Sheikh Tamim are expected to receive Qatari citizens who want to "swear allegiance" to the new emir.
A cabinet reshuffle is also expected as part of the changes in the government line-up, with younger ministers likely to take charge. It is not clear if the long-serving Prime Minister and Foreign Minister, Sheikh Hamad bin Jassim Al Thani, will also step aside.
Qatar has been dominated by the Al Thani family for almost 150 years.
Sheikh Hamad seized power from his father Sheikh Khalifa in a bloodless coup in 1995, with the support of the armed forces and cabinet, and also neighbouring states.
Since then the emir has introduced some political and economic liberalisation, and in recent years has made Qatar a major player in regional diplomacy.
In 2003, he named Sheikh Tamim - his second son by his second wife Sheikha Moza bint Nasser - as his heir apparent. He replaced his elder brother, Sheikh Jassim Bin Hamad Al Thani.
Analysts say the British-educated Sheikh Tamim, who is deputy commander-in-chief of the armed forces, is unlikely to deviate far from his father's policies.
He chairs the 2030 Vision project which outlines the development goals for the country and has a clear liberalising social agenda. The project has had significant input from his father and mother.
Sheikh Tamim is also head of the Qatar 2022 Supreme Committee, which is in charge of preparing the emirate to host the 2022 Fifa World Cup.
In foreign policy, the emirate is expected to maintain its alliance with the West while at the same time pursuing an activist stance in Syria and other Arab countries.
However, he will also inherit strained relations with some of Qatar's Gulf neighbours, notably Bahrain and the United Arab Emirates (UAE), who have been angered by Qatar's perceived closeness to the influential regional Islamist movement, the Muslim Brotherhood.
The emirate has also tried to increase its diplomatic prestige further afield. Earlier this month, Afghanistan's Taliban movement opened its first office in the capital Doha to facilitate peace talks with the United States.