Texas athletic director DeLoss Dodds confirmed he will step down on Aug. 31, 2014 after 32 years on the job.
Dobbs, 76, is expected to stay on as a consultant for another year.
"I love The University of Texas, and I love the people. We've had a great run," Dodds said Tuesday. "I have been contemplating this decision for awhile. (Texas president) Bill Powers and I have talked it over, and this is something I am ready to do at this time."
Powers said the search for Dodd's replacement will begin immediately, and he is expected to name a successor before the end of the calendar year. West Virginia athletic director Oliver Luck, a graduate of the Texas Law School, is a likely candidate. Big 12 commissioner Bob Bowlsby is also expected to be a candidate.
"I promised to let people know well in advance. I want the university to have the appropriate amount of time to find a successor, and I want to ensure that the athletics department can prepare and execute a succession plan for new leadership," Dodds said.
Texas has made more than $400 million in facility upgrades under Dodds' leadership. He hired Mack Brown (football) and Augie Garrido (baseball), who combined for three national titles. The school also has a 20-year, $300 million agreement with ESPN to form the Longhorn Network for the school's third-tier television rights. The Longhorns have the nation's largest annual athletic budget at $163 million.
"DeLoss Dodds is one of the giants of college athletics," Powers said. "His vision reshaped The University of Texas and the entire NCAA, and it's been an honor to both work with him and call him a friend for so many years.
"I know that we will never truly be able to replace DeLoss Dodds. But the house that he built will remain strong for future generations of Longhorns."