The committee, which said the former Norwegian prime minister would remain as a committee member, gave no reason for its decision.
However the renowned diplomat had drawn sharp criticism shortly after becoming committee chairman in 2009 for awarding the prestigious Nobel to newly elected US President Barack Obama.
The move stunned the world and the recipient alike, as Obama had been in office less than nine months and the United States was waging simultaneous wars in Afghanistan and Iraq.
And in 2012 Jagland became the face of a body that handed the award to the increasingly unpopular European Union for its commitment to "peace and reconciliation, democracy and human rights", a decision mocked by commentators and former Nobel laureates alike.
After six years at the helm of the high-profile committee, Jagland will be replaced by current deputy head, Kaci Kullmann Five, the organisation said.
"There was broad agreement within the committee that Thorbjoern Jagland was a good chair for six years," Kullman Five told reporters.
A former leader of Norway's Labour Party who has served as prime minister, foreign minister and speaker of parliament, Jagland spent much of his career years trying to bolster support for Norway to join the EU.
The Norwegian Nobel committee is made up of five members appointed by parliament but claims total independence in its decision making.
Today's announcement means the committee will be steered by a majority of right-wing politicians.
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