Callaway, the company's founder, said his recent health concerns were the main reason for his decision to retire.
Callaway underwent gall bladder surgery in April. During the procedure doctors found a tumor on his pancreas.
Callaway's replacement as CEO and president will be Ron Drapeau who served as senior executive vice president of manufacturing.
'In my opinion, Callaway Golf deserves a healthy and qualified, full-time CEO right now,'' Callaway said.
Callaway had planned to give up control of the day-to-day operations of the company later this year. Callaway will remain chairman of the board. The 54-year-old Drapeau will take over effective immediately.
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