The 64-year-old Parker, who has served as CEO at the sporting goods giant since 2006, will become executive chairman of the board.
Donahoe gave the following statement: "It is an honor to become President and CEO of this fantastic, innovative company, and to join the more than 76,000 talented and passionate employees dedicated to serving athletes".
Nike did not give any reason for Parker's exit from the top job.
While Nike positioned Donahoe's appointment as a natural move for the company as it steps up its digital-focused efforts, some insiders speculated that controversies surrounding Parker and the company played a role in the shift.
In a statement to Nike employees, Parker said "there are no issues I'm not sharing".
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Credited with creating the popular Nike Air sneakers as well as other pioneering products, Parker, in the past few years, oversaw Nike's shift to selling directly to customers online and its success in global markets, particularly China. Donahoe has served as a Nike board member since 2014.
Donahoe, who has been on Nike's board since 2014, will take over January 13, while Parker will become executive chairman and continue to lead Nike's board.
The company said Q3 revenue will come to $885.8 million, up 32 per cent from a year ago.
During Parker's tenure, Nike's stock surged more than nine-folds.
Over the past year, however, Parker faced a number of speedbumps as he chased his target of $50 billion in annual sales.
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Last year, at least 11 Nike executives left the company over complaints of an uncomfortable workplace that discriminates against women. "It definitely seems like it could be part of" the OR scandal, Yarbrough said, referring to Parker's departure.
Donahoe brings a wealth of tech industry experience to Nike, which is morphing into a tech company in many ways, investing in recent initiatives such as its "Consumer Direct Offense" strategy and its Nike App.
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