The NBA Board of Governors unanimously approved the elevation of Adam Silver, Stern's deputy, to commissioner.
Stern has been the NBA's commissioner since Feb. 1, 1984.
During labor talks last December, he predicted it would be the final collective bargaining agreement before he steps down.
"This is a 10-year (labor) deal, with a re-opener at six," Stern said at the time. "I'm not planning to be here certainly for the 10 and probably not the six."
Stern has been the NBA's longest-serving commissioner. He is credited with establishing the league's brand around the world, presiding over team expansion and overseeing the establishment of the WNBA.
"You'll be remembered as the best of all time," Silver told Stern at a news conference.
ESPN contributed to this report.