Schmidt joins Google, which has quickly established itself as one of the most highly used search engines on the web, with more than 20 years' experience in software development, management and marketing.
He adds what the young internet start-up community has come to dub "grey matter", referring to his wealth of experience and their relative lack of. Google was founded three years ago by two Stanford University students. Both co-founders are still in their twenties.
Schmidt will take over from co-founder Larry Page, who will become president of products. The other co-founder, Sergey Brin, will become president of technology.
Schmidt has been chairman of Google since March 2001. He recently left Novell, where he had served as CEO and chairman since 1997.
Before joining Novell, he was chief technology officer and corporate executive officer at Sun Microsystems, where he led the development of the company's Java programming technology. Before this, he was a member of the research team at Xerox Palo Alto Research Center (PARC).
Under Schmidt's leadership, it is understood that Google will focus on expanding its business-to-business operations. The company's website does not take ordinary banner ads -- its revenue comes from sponsored links and from providing technology to other companies. Yahoo, for example, pays Google for supplying technology to supplement its own web directories.