Zhang, who was earlier the Chief Executive Officer (CEO) of Taobao, an online shopping portal owned by the Alibaba Group, was appointed the CEO of the Alibaba Group in 2015. Zhang, 46, has been in the job since 2015 after serving as chief operating officer and is known as a key architect of Alibaba's "Singles Day", the November 11 event that has become the world's largest online shopping event.
Ma, a former English teacher with no technical background, co-founded Alibaba in 1999 with 17 others and has become one of China's richest people with a net worth of $36.6 billion, according to Forbes.
"I will work closely with Daniel to ensure a smooth and successful transition", Ma said in a letter released by the company.
The report of his retirement came as a surprise, especially in the Chinese government circles as the NYT report said Mr. Ma was relinquishing as China's business environment had soured, with the government and state-owned enterprises increasingly playing more interventionist roles with companies. He is a permanent member of the Alibaba Partnership.
"The world is big, and I am still young, so I want to try new things", Mr Ma said, adding he plans to continue in his role as founding partner.
The charismatic Mr Ma, who is known for dressing like a rock star, said he wanted to return to education.
Mr Ma gave up the title of Alibaba CEO in 2013 but remains a pivotal figure within the company as well as its most recognisable face.