Mr Gates, who made his fortune through developing software for the personal computer, plans to devote his time to charity work.
As a teenager Bill Gates had a vision of a personal computer on every desk in every home.
He says he caught sight of the future and based his career on what he saw.
Great responsibility
The son of a successful lawyer from Seattle, Mr Gates programmed his first computer at the age of 13.
During his two years at Harvard University, he spent much of his time finessing his programming skills as well as enjoying the occasional all-night poker session.
He eventually dropped out of college and moved to Albuquerque, in New Mexico, where he set up Microsoft with his childhood friend, Paul Allen.
Their big break came in 1980 when Microsoft signed an agreement with IBM to build the operating system that became known as MS-DOS.
Microsoft went public in 1986 and within a year Bill Gates, at 31, had become the youngest self-made billionaire.
In an interview with the BBC, Mr Gates explained that Microsoft benefitted because "most of our competitors were very poorly run".
"They did not understand how to bring in people with business experience and people with engineering experience and put them together. They did not understand how to go around the world."
New horizons
Now 52, he still has boyish looks, but he is no longer the world's richest man. He has been overtaken by the investor Warren Buffett and the Mexican telecom tycoon Carlos Slim.
But Mr Gates' fortune is at the root of his decision to leave his day job and concentrate on his charitable organisation, the Bill and Melinda Gates Foundation.
He will remain as Microsoft's chairman and work on special technology projects, but according to Mr Gates, great wealth brings great responsibility and his future work will include finding new vaccines and financing projects in the developing world.
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