Schmidt owns 2.3 percent of Google. He plans to sell 42 percent of his shares, worth $785.37 per share as of the close of markets Friday -- or about $2.5 billion in all -- The Guardian reported Saturday.
Google's filing with the Securities and Exchange Commission said Schmidt was looking for "individual asset diversification and liquidity."
Schmidt plans to sell the stock gradually during the course of the year, to have minimum impact on share prices, the regulatory filing said.
Schmidt ran Google for 10 years, but handed off day-to-day operations to co-founder Larry Page in 2011.
He has since become more involved in politics and was a major supporter of President Barack Obama's re-election campaign.
Forbes Magazine has pegged Schmidt's total worth at about $7.5 billion.