The surprise departure, announced Tuesday, comes just two weeks after Yahoo Inc. hired former PayPal executive Scott Thomson as its CEO.
Yang expressed his support of Thompson in his resignation from Yahoo's board of directors. He had been on Yahoo's board since the company's 1995 inception.
Yang is also stepping down from the boards of China's Alibaba Group and Yahoo Japan. Yahoo is negotiating to sell its stakes in both companies.
Yang is also giving up his title as "chief Yahoo."
Although a popular figure among Yahoo employees, Yang had alienated the company's shareholders by turning down a $47.5 billion takeover offer from Microsoft Corp. in 2008.