Mundie has overseen the work of Microsoft''s security programme and R&D.
He was picked for the role by Bill Gates in 2008 when the Microsoft co-founder ended his day-to-day involvement with the firm.
Prior to retirement Mundie will act as a senior adviser to Microsoft chief executive Steve Ballmer, the BBC reports.
Responsibility for Mundies roles has now passed to Eric Rudder, formerly Microsoft''s chief technical strategy officer.
The Seattle Times reported that the move was part of efforts by Ballmer to install a team that could help Microsoft cope with an increasingly mobile and web-centred industry.
Mundie is the second senior executive to step down at the firm in less than a month.
In November Steven Sinofsky, then head of Microsoft''s Windows division, left unexpectedly.