Yahoo! said co-founder Jerry Yang resigned from the board and all other positions, two weeks after the company announced new leadership under chief executive Scott Thompson.
The shares rose in extended trading.
Yang, who started Yahoo! in 1995 with David Filo, also left the boards of Yahoo Japan and Alibaba Group Holding, both of which Yahoo! has stakes in, effective today, Yahoo! said.
The company hired Thompson, former president of EBay's PayPal unit, on January 4, asking him to complete a strategic review of Yahoo!'s options that began in September.
"Jerry's thrown in the towel. He founded the company - this is his baby," said Colin Gillis, an analyst at BGC Partners LP in New York, who rates the stock a "hold" and doesn't own it. "The strategic position hasn't changed."
Yang leaves the company, the largest US web portal, as it struggles to compete with Google and Facebook for online advertising. Yahoo! has been considering selling all or part of its stakes in Alibaba Group, China's biggest e-commerce company, and Yahoo Japan, and has fielded proposals to sell a stake in itself from a group led by private equity firm Silver Lake and another from TPG Capital.
Microsoft has expressed an interest in helping finance a purchase.
Yang, who had the position of "chief Yahoo," was chief executive from June 2007 to January 2009, when the Sunnyvale, California-based company rejected an acquisition offer from Microsoft for $47.5 billion. He was replaced by Carol Bartz as chief executive, who was fired in September 2011.
"My time at Yahoo!, from its founding to the present, has encompassed some of the most exciting and rewarding experiences of my life," Yang said in the statement. "However, the time has come for me to pursue other interests outside of Yahoo!"
Yang's exit comes after Yahoo! investor Third Point LLC asked for two board seats and for Yang to step down as a director. Third Point cited the "board's inability - or perhaps unwillingness - to properly solicit true strategic alternative bids, let alone to negotiate them," in a November statement.
Yahoo! shares fell less than 1 per cent to US$15.43 at the close in New York. They rose as high as US$16.48 after the announcement.
"We appreciate Jerry's comments and share his enthusiasm for the company's prospects," said Roy Bostock, Yahoo!'s chairman.
"With Scott Thompson leading an outstanding team of Yahoos to deliver innovative products and an engaging customer experience, Yahoo!'s future is bright."