Homeland Security chief leaving for academic post
Napolitano is likely to more than triple her salary, from about $200,000 to the $600,000 earned by the University of California's current president.
It was not immediately clear who would replace her at the at the helm of the Department of Homeland Security, the third-largest U.S. department with a broad mandate including immigration and disaster response.
Napolitano, a former Arizona governor, has been a vocal proponent of immigration reform and had a prominent role in briefing Congress and the public about terrorist threats and attacks, such as the Boston Marathon bombings earlier this year.
Obama thanked her for working "around the clock" to respond to natural disasters including the Joplin, Missouri tornado and Hurricane Sandy that battered the Northeast, as well as other challenges.
"Since day one, Janet has led my administration's effort to secure our borders, deploying a historic number of resources, while also taking steps to make our immigration system fairer and more consistent with our values," Obama said in a statement.
"The American people are safer and more secure thanks to Janet's leadership," he said.
The Department of Homeland Security was created in response to the September 11, 2001, attacks and has more than 240,000 employees focusing on sectors including aviation, border security and cyber-security.
Earlier in her career, Napolitano led the domestic terrorism investigation into the Oklahoma City bombing as U.S. attorney for the District of Arizona. She also served as an attorney for Anita Hill, who testified to Senate in 1991, accusing then-U.S. Supreme Court nominee Clarence Thomas of sexual harassment.
Napolitano in a statement thanked Obama for the chance to serve the United States "during this important chapter of our history" and said she was looking forward to her new role focusing on "educating our nation's next generation of leaders."