Shintaro Tsuji said he would hand over control of Sanrio to his 31-year-old grandson, Tomokuni Tsuji.
It marks the first change in leadership in the company's six-decade history.
Hello Kitty, a mouthless cartoon adorned with a trademark hair bow, has generated billions of dollars since its inception almost 50 years ago.
The simple line-drawn image has appeared on merchandise including clothing, toys and stationery.
It is targeted mostly at young children, but in recent years it has also proved popular with adults.
Mr Tsuji will formally leave his role on 1 July.