Google CEO Larry Page announces the move on the company blog:
Having exceeded even the crazy ambitious goals we dreamed of for Android—and with a really strong leadership team in place—Andy's decided it's time to hand over the reins and start a new chapter at Google. Andy, more moonshots please!
Going forward, Sundar Pichai will lead Android, in addition to his existing work with Chrome and Apps. Sundar has a talent for creating products that are technically excellent yet easy to use—and he loves a big bet. Take Chrome, for example. In 2008, people asked whether the world really needed another browser. Today Chrome has hundreds of millions of happy users and is growing fast thanks to its speed, simplicity and security. So while Andy's a really hard act to follow, I know Sundar will do a tremendous job doubling down on Android as we work to push the ecosystem forward.
Cue the "Oh no! Google's doomed!" blog posts. Oh, wait...
This tweet by Rene Ritchie sums it up nicely.