The Emir of Qatar, Sheikh Hamad bin Khalifa Al Thani, has handed over power to his son, the Heir Apparent Sheikh Tamim bin Hamad Al Thani.
In a speech broadcast on Qatari television, he said it was time for a new generation to take over.
Rumours had been circulating for days that Sheikh Tamim, 33, was preparing to succeed his 61-year-old father.
A peaceful handover is a rarity for the Gulf, where most rulers stay in place for decades, normally until they die.
Qatar-based al-Jazeera TV said Sheikh Hamad told the "ruling family and top advisers" of his decision on Monday.
Addressing the nation on Tuesday, a national holiday, Sheikh Hamad said: "I announce I am handing over power to Sheikh Tamim bin Hamad Al Thani".
Analysis
This marks the end of an extraordinary era for Qatar under the rule of Sheikh Hamad.
He seized power from his own father in 1995, and has since overseen the transformation of the tiny Gulf state into an influential global player. He invested the country's huge oil and gas revenues in large projects here and overseas. The IMF estimates Qatar now has, by some margin, the highest GDP (economic output) per capita in the world.
Under Sheikh Hamad, Qatar enhanced its co-operation with the US, which has a large military base outside Doha.
While other regional powers feared what the Arab Spring would bring, Sheikh Hamad saw it as an opportunity. Qatar funded rebel movements, particularly in Libya, and is doing so now in Syria.
Accusations of a dangerous Islamist agenda, one that is fuelling sectarian tensions across the region, have been brushed aside.
No-one appears to expect any sudden change in foreign policy under the new emir.
Considering Sheikh Tamim's age and the amount of financial and political clout he will wield internationally, there may be a little nervousness amongst the country's allies until his vision for Qatar's future becomes clear.
"I am fully certain that he is up to the responsibility, deserving of confidence, capable of shouldering the responsibility and fulfilling the mission," he said, adding that his decision was to open the way for a "young leadership".
"Our youth have proved in recent years that they are resolute people, that they comprehend the spirit of the times and participate in it," he added.
Sheikh Hamad said he had never sought power for its own sake or for personal gain, but "for the good of the nation".
State television later showed Qataris greeting the outgoing emir and Sheikh Tamim at the royal court.
Cabinet shake-up?On Wednesday, both Sheikh Hamad and Sheikh Tamim are expected to receive Qatari citizens who want to "swear allegiance" to the new emir.
A cabinet reshuffle is also expected as part of the changes in the government line-up, with younger ministers likely to take charge. It is not clear if the long-serving Prime Minister and Foreign Minister, Sheikh Hamad bin Jassim Al Thani, will also step aside.
Qatar has been dominated by the Al Thani family for almost 150 years.
Sheikh Hamad seized power from his father Sheikh Khalifa in a bloodless coup in 1995, with the support of the armed forces and cabinet, and also neighbouring states.
Since then the emir has introduced some political and economic liberalisation, and in recent years has made Qatar a major player in regional diplomacy.
Tamim bin Hamad Al Thani
- Born in 1980
- Educated at exclusive Sherborne School and Sandhurst Military Academy in the UK
- Replaced his brother as crown prince in 2003
- Has held many influential posts, including head of Qatar Investment Authority
- Becomes the youngest leader in the Arab world
In 2003, he named Sheikh Tamim - his second son by his second wife Sheikha Moza bint Nasser - as his heir apparent. He replaced his elder brother, Sheikh Jassim Bin Hamad Al Thani.
Analysts say the British-educated Sheikh Tamim, who is deputy commander-in-chief of the armed forces, is unlikely to deviate far from his father's policies.
He chairs the 2030 Vision project which outlines the development goals for the country and has a clear liberalising social agenda. The project has had significant input from his father and mother.
Sheikh Tamim is also head of the Qatar 2022 Supreme Committee, which is in charge of preparing the emirate to host the 2022 Fifa World Cup.
In foreign policy, the emirate is expected to maintain its alliance with the West while at the same time pursuing an activist stance in Syria and other Arab countries.
However, he will also inherit strained relations with some of Qatar's Gulf neighbours, notably Bahrain and the United Arab Emirates (UAE), who have been angered by Qatar's perceived closeness to the influential regional Islamist movement, the Muslim Brotherhood.
The emirate has also tried to increase its diplomatic prestige further afield. Earlier this month, Afghanistan's Taliban movement opened its first office in the capital Doha to facilitate peace talks with the United States.
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