Nooyi will continue holding her chairman position through early 2019 to 'ensure a smooth and seamless transition, ' the company said in a statement.
Nooyi joined PepsiCo in 1994 and became the Chief Financial Officer in 2001.
In a statement, Ian Cook, presiding director of PepsiCo's Board of Directors, lauded Nooyi for 'leading the way on corporate sustainability and responsibility, and embedding a sense of objective in everything the company does'.
Nooyi, 64, has been with PepsiCo Inc. for 24 years and has held the top job for 12. "PepsiCo's best days are still ahead of it".
Indian-origin Nooyi has been at the helm of the New York-based company for 12 years.
Nooyi is PepsiCo's fifth CEO in the company's 53-year history.
Ramon Laguarta, the future CEO, has spent 22 years at the company, and served as the President of PepsiCo. Mr Laguarta will be elected to the company's board of directors with effect from October 3. Prior to that, Laguarta served in leadership positions in the European and sub-Saharan Africa divisions.
Earlier this year, Indra Nooyi was named the first independent female director of the International Cricket Council (ICC).
"Guided by our philosophy of Performance with goal - delivering sustained performance while making more nutritious products, limiting our environmental footprint and lifting up all the communities we serve - we've made a more meaningful impact in people's lives than I ever dreamed possible", she said.
Under Nooyi's leadership, PepsiCo's revenue grew more than 80 per cent, outperforming our peers and adding a new billion-dollar brand nearly every other year.
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