The announcement came Sunday as Steven Spielberg, co-founder of DreamWorks, and Stacey Snider, Dreamworks' co-chairman and chief executive officer, leave the studio to form their previously announced new motion pictures company in partnership with India's Reliance BIG Entertainment.
Dreamworks co-founder David Geffen, who oversaw the transition for DreamWorks, will not be joining the new company, Paramount said.
Viacom, Paramount's parent company, bought DreamWorks in February 2006.
As part of the Paramount-DreamWorks separation agreement, the DreamWorks principals' new company will take the lead on a number of development projects, which Paramount will have the option to co-finance and co-distribute.
The majority of existing DreamWorks staff is expected to be offered positions at the new company.
All other projects currently in development will remain at Paramount with the opportunity for the Reliance-backed venture to co-finance several projects to which Spielberg is attached, Paramount said.
Spielberg will also continue to produce the "Transformers" franchise for Paramount and collaborate on three other Paramount films, including "When Worlds Collide."
Couple mistakenly served bag of cash at McDonald's drive-thru
Exploding whale video goes viral on Internet