Ulrich, who turns 65 in April, will remain as chairman through the end of fiscal 2008, The St. Paul Pioneer Press reported.
"The board has tremendous respect for Bob's exceptional leadership and the remarkable performance Target has achieved under his direction," said Jim Johnson, Target board of directors' Executive Committee vice chairman.
Under Ulrich's leadership, Target nearly tripled its sales and U.S. store presence, and has increased its net earnings nearly nine-fold. Based in Minneapolis, Target Corp. is the nation's fifth largest retailer by sales revenue.
Steinhafel, 52, joined Target in 1979 and was named executive vice president for merchandising in 1994. He was promoted to president of Target in 1999 and became a board of directors member in 2007.