He will be replaced as chief executive in November by Stefan Larsson, president of Old Navy, the low-price clothes brand owned by Gap Inc.
Mr Lauren, who will turn 76 in October, plans to stay on as the chief designer for the label.
The news caused Ralph Lauren's shares to rise 3.9% in post-trading hours. Shares in Gap fell by 3.4%.
"He understands what dreams are,'' Mr Lauren said. "In this business, it's about dreams because you are dreaming ahead and you're about progress and change and newness."The company - well-known for its polo shirts - has expanded from selling clothes into the restaurant trade in recent years.
Mr Larsson, 41, led Old Navy from 2012 and has been credited with boosting sales, even as other Gap labels faltered. Before taking over Old Navy, he worked for the Swedish brand H&M for 15 years.
Ralph Lauren made $7.5bn (£5bn) in sales last year.
Mr Lauren said his successor was "exceptionally talented" and would bring "a fresh and exciting global perspective" to the company.