Mr Narev has been heavily criticised for a money laundering scandal that has rocked the bank, which is facing potentially billions of dollars in fines from a court case by regulator AUSTRAC.
Narev, aged 50, has been in the job since the end of 2011, bringing the bank to a record full year profit of nearly $10 billion, an paying out billions in dividends to shareholders during his tenure.
Commonwealth Bank of Australia said on Monday its chief executive Ian Narev will retire by June 2018.
Livingstone then said: "The board's actions reflect the focus we are taking on improving the trust among people, customers, businesses and communities that the Bank exists to serve".
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The Commonwealth CEO, along with the other major banks, has been called before a parliamentary committee to face questioning on the culture within Australia's big banks.
The exact timing of Narev's departure will depend on the search for a successor, with the board looking at both internal and external candidates.
CBA's chairman Catherine Livingstone said the board had made a decision to bring forward details of its succession planning to deal with "speculation and questions about his tenure".
Livingstone said succession planning was an "ongoing process" and that following discussions with Narev it was agreed it was "important for the business that we deal with the speculation and questions about his tenure".