Zhang will shift to focus on cloud intelligence, Alibaba said. Zhang has since December been concurrently serving as group CEO and chairman as well as head of its cloud unit.
Joseph Tsai, currently executive vice chairman, will succeed Zhang as group chairman.
Earlier this year, after a tumultuous two years that saw Alibaba heavily targeted by increased regulatory scrutiny, the firm said it would restructure into six units, each with their own boards and CEOs.
Its China-facing e-commerce division, which includes the Taobao and Tmall marketplaces, will stay wholly owned by Alibaba Group, but the other five units will be spun off, with Alibaba saying in May it aimed to complete the public listing of its cloud unit within the next 12 months.
Zhang, in a memo to staff seen by Reuters, said the spin-off of the cloud unit was approaching a crucial stage and that it was the right time for him to dedicate his full attention to the business.
"From a corporate governance perspective, we also need clear separation between the board and management team as the Cloud Intelligence Group proceeds down the path to becoming an independent public company," he said.
"It would be inappropriate for me to continue serving as chairman and CEO of both companies at the same time during the spin-off process."
Analysts have estimated the cloud unit to be worth $41 billion to $60 billion but have said the reams of data it oversees could put it in the cross-hairs of regulators both at home and abroad.
Zhang, a former accountant, has served as Alibaba CEO since 2015. He took on the chairmanship in 2019, succeeding both roles from Alibaba co-founder Jack Ma.
Wu, who co-founded Alibaba alongside Ma and Tsai over two decades ago, will continue to concurrently serve as chairman of Taboa and Tmall Group, the company said. His previous roles include chief technology officer of Alipay and chairman of Alibaba Health.
