Stanley Fink, chief executive of the Man Group, said that since suffering a brain tumour in 2004 he has refocused his priorities.
Harvey McGrath, Man Group's chairman, said: "Stanley has indicated to the board his wishes to become non-executive, not least in order to be able to commit more time to personal interests, in particular his philanthropic activities."
The move is a radical departure for the successful businessman, who has overseen explosive growth in the group's funds from $4.7 billion to $54 billion since becoming chief executive in 2000, with profits of Â£1.2 billion.
This growth has boosted his personal fortune, as the Man Group's annual report revealed Mr Fink earned approximately Â£6 million in the year to March 31st, a 57 per cent increase on the previous year.
Mr Fink will be replaced as chief executive by finance director Peter Clarke, although Mr Fink will stay on as a non-executive deputy chairman.
Estinates by industry observers suggest that there are now more than 8,000 hedge funds worldwide, with some 1.5 trillion in assets.