Wilson, a sometimes controversial figure who helped build the Canadian company into an international success story, said the move will also allow him to focus on Kit and Ace, a casual wear company that his wife and son launched last year.

A spokesman for Wilson said he has no immediate plans to trim his 13.75 percent stake in the company.

"I now believe the company has returned to the core values that made it great," he said in a statement.

Kit and Ace plans to open at least 100 stores across North America by 2019.

Lululemon's stock has surged some 75 percent since its June low after boardroom battles and disappointing results. On Monday it was down 1.3 percent at $65.40.

"We believe Mr. Wilson's departure solidifies stability of the leadership team going forward, and lessens tension behind decision making and voting power," Stifel equity analyst Jim Duffy said in a research note.

Wilson, who founded Lululemon in 1998, withdrew from day-to-day management in early 2012, and said in December 2013 he was stepping down as chairman. He stayed on as a director.

Wilson had returned to take a more active role in operations in spring 2013, after Lululemon issued a high-profile recall of its signature yoga pants following complaints they were too see-through.

The recall led to the departures of top executives and a public relations headache. In December 2013, the company named a new chief executive officer, Laurent Potdevin.

Problems were compounded when Wilson said fabric in some pants was not holding up because "some women's bodies just actually don't work" for Lululemon's clothing. Wilson later said he was "sad for the repercussions of his actions."

Tensions remained, with Wilson lashing out last June, saying the new chairman and another director were too focused on short-term growth.

A proxy war was averted when Wilson agreed to sell half of his 27 percent stake to private equity firm Advent International for $845 million.

"Since the Advent announcement in late summer, infighting seems to have calmed, likely in an effort to turn around public perception of the brand," said Duffy.

(Reporting by Solarina Ho in Toronto; Additional reporting by Euan Rocha in Toronto and Sneha Banerjee in Bengaluru; Editing by Kirti Pandey, Jeffreys Hodgson and Benkoe)

By Solarina Ho