The United States will turn over control to the "global Internet community."
Facing international pressure, the U.S. government has agreed to give up control over important technical aspects of the Internet.
The Commerce Department will no longer oversee the Internet Corporation of Assigned Names and Numbers, a nonprofit group that manages the Internet's address system.
Larry Strickling, the assistant secretary of Commerce for communications and information, said the "global Internet community" will have the final say over the database of names and addresses that allows computers around the world to communicate with each other.
The Internet was invented in the United States, and the country has long maintained a central role. But as the Internet has grown, other countries have demanded a greater voice in its governance.
Edward Snowden's leaks about the National Security Agency's mass-surveillance programs have exacerbated resentment over the central role of the United States in managing the Internet.
But officials argued the transition is not a response to the international controversy over NSA spying. Strickling said the U.S. oversight of the Internet's domain system was always meant to be temporary.
"The timing is right to start the transition process," he said. "We look forward to ICANN convening stakeholders across the global Internet community to craft an appropriate transition plan."
Fadi Chehadé, the president and CEO of ICANN, said he will work with governments, businesses, and nonprofits to establish a new system for managing the Internet's domain system.
"All stakeholders deserve a voice in the management and governance of this global resource as equal partners," he said.
The U.S. government will continue its role until its current contract with ICANN expires in September 2015.
Strickling said ICANN's proposal must meet certain criteria, including that it "maintain the openness of the Internet" and preserve security and stability. He insisted that foreign governments and intergovernmental groups will not gain new powers over the Internet.
But some business groups are nervous about what the transition will mean.
Daniel Castro, an analyst for the Information Technology and Innovation Foundation, a pro-business think tank, warned that giving up the traditional U.S. oversight role could result in "a splintered Internet that would stifle innovation, commerce, and the free flow and diversity of ideas that are bedrock tenets of world's biggest economic engine."
Bob Liodice, the CEO of the Association of National Advertisers, said he is "very disappointed" with the announcement. His group has battled with ICANN for several years over its plan to allow for thousands of new Web address endings beyond the traditional ".com" and ".org."
"We saw the U.S. relax accountability with the recent domain name expansion," he said. "In a world without U.S. oversight, we worry that such issues will be further aggravated potentially causing significant economic concerns, consumer confusion and impairment to brand ownership."
Sen. Jay Rockefeller, the Democratic chairman of the Senate Commerce Committee, has been a frequent critic of ICANN's decisions. But he said Friday that the announcement is consistent with U.S. efforts to ensure the Internet is free from government control.
"Since 1998, the U.S. has been committed to transitioning management of the Internet's domain name system to an independent entity that reflects the broad diversity of the global Internet community," he said.
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