Vanguard, which is based in Pennsylvania, manages 369 funds for more than 20 million investors worldwide, and now holds $4.4trn (€3.85trn) in global assets under management. McNabb will remain as chairman of the board, a role he assumed in 2009.
Under McNabb, Vanguard more than tripled in size as investors embraced the low-priced index funds for which it is best known. He has served as the firm's chief information officer, head of the information technology division and head of the retail investor group.
In a statement on Thursday, he said "it is the right time for a new leader and the Board is unanimous in its belief that Tim Buckley is the ideal next chief executive".
McNabb, CEO since 2008, will remain as chairman of the board while Greg Davis, now global head of the firm's fixed income group, will become CIO with responsibility for some $3.8trn managed across more than 300 mutual funds and ETFs.
Buckley will become the firm's fourth chief executive since its establishment in 1975.More news: Woolworths To Ban Single-Use Plastic Bags From Next Year
Vanguard announced that Mortimer "Tim" Buckley will succeed Bill McNabb as chief on January 1. Buckley, who has a bachelor's degree and a master's in business administration from Harvard, started at Vanguard in 1991 as Bogle's assistant. Much of the investor money has come Vanguard's way. He has held numerous leadership roles with the firm before being appointed chief investement officer in 2013.
Also, he was formerly the company's Asia Pacific chief investment officer and a director of Vanguard Investments Australia. "I look forward to continuing to work closely with Bill over the next six months as I transition to my new role".
Vanguard has about $5.5 trillion in assets under management, including more than $940 billion in ETFs.
Davis led the fixed income group since 2014 and prior to that served as chief investment officer for Asia Pacific and was a director of Vanguard Investments Australia.