Arnold stepped down as president today and will continue to serve in a special capacity, reporting to chairman and chief executive AG Lafley until 1 September.
The vice-chairmen of P&G global business units, who have hitherto reported to Arnold, will now report to Lafley, reducing a layer of management as part of the company's ongoing simplification effort.
'Susan has been an integral part of P&G's leadership team over the past decade, most recently as president of global business units responsible for more than $80 billion in sales and more than 300 brands worldwide,' said Lafley.
'She has also been an architect of the company's winning Beauty strategy for the past decade,' he added.
Under her leadership, P&G's Beauty business has nearly tripled in size from about $7 billion in 1999 to $20 billion today.
Arnold has been touted by observers as a contender to replace Lafley, who is 61 and likely to retire in four years' time.