Sinofsky originally joined the Redmond giant back in 1989, but was only charged with heading up its Windows division 20 years later in 2009.
His departure comes after Ballmer revealed Windows 8 had enjoyed a better start at retail than its predecessor.
Windows winner
"I am grateful for the many years of work that Steven has contributed to the company," said Ballmer of the news.
"The products and services we have delivered to the market in the past few months mark the launch of a new era at Microsoft.
"To continue this success it is imperative that we continue to drive alignment across all Microsoft teams, and have more integrated and rapid development cycles for our offerings."
Much of Sinofsky's work will now be taken on by Julie Larson-Green herself a 19 year Microsoft veteran - who will lead all Windows software and hardware engineering "effective immediately".
Larson-Green has previously worked on Microsoft products such as Internet Explorer and Office.
CFO and CMO Tami Reller who joined Microsoft's Windows operation in 2007 - will also now assume responsibility for the Windows business.
'Humbled'
"It is impossible to count the blessings I have received over my years at Microsoft," said Sinofsky.
"I am humbled by the professionalism and generosity of everyone I have had the good fortune to work with at this awesome company."
Windows 8 represents the biggest overhaul to Microsoft's flagship product for decades, with the firm looking to link its PC, tablet and smartphone ecosystems in order to take on Apple's iOS and Google's Android.
Ballmer has claimed the other cog in the Windows wheel - its Surface tablet - has got off to a "modest" start, owing to restricted shipments of the device.
[source: Microsoft]
