She will remain as chairman until early 2019.
Laguarta will take over on October 3 and will also join the board, the company said in a statement. Current president Ramon Laguarta will succeed her. 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.
He also served as CEO of the company's Europe Sub-Saharan Africa division before becoming president.
The 54-year-old Laguarta has held various positions in his 22 years at Pepsico, which is based in Purchase, New York.
Nooyi was named as Fortune's second most powerful woman in business previous year, coming after chairman and CEO of General Motors, Mary Barra.
Later taking to Twitter, she said, "Today is a day of mixed emotions for me".
"Ramon Laguarta is exactly the right person to build on our success". The company's share price has risen 78 per cent in the same period.
"Indra has provided outstanding leadership over the past 12 years, serving as a model both within our industry and beyond for responsible corporate stewardship in the 21st century", said presiding director Ian Cook.
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