Ford to get new chief executive
During his eight-year tenure, Mr Mulally gambled all of the company's assets on a credit line that kept Ford out of bankruptcy, then used a simple "One Ford" plan to change its culture.
He was lured away from aircraft maker Boeing in 2006 by Bill Ford, who at the time was running the company.
Mr Fields, 53, has been in charge of Ford's daily operations since December 2012 and was widely expected to one day ascend to the top job.
The change in leadership is taking place about six months ahead of schedule, but Ford said that was based on Mr Mulally's recommendation that the new leaders were ready.
"Alan and I feel strongly that Mark and the entire leadership team are absolutely ready to lead Ford forward, and now is the time to begin the transition," Mr Ford said in a statement.
The company's executive chairman is the great-grandson of company founder Henry Ford.
Mr Mulally, 68, trained as an aeronautical engineer. He spent 36 years at Boeing and was president of the commercial plane division when he left for the struggling carmaker.
He overcame scepticism about being an outsider in the insular ranks of the Detroit car industry by quickly pinpointing the reasons why Ford was losing billions each year.
Mr Mulally put a stop to the infighting that had paralysed the company and instituted weekly management meetings where executives faced new levels of accountability and were encouraged to work together.
It took two years for Mr Mulally to turn the company around but since 2009 Ford has posted pre-tax profits of 34.5 billion US dollars (£20.4 billion) and its shares have more than doubled.
Mr Fields was one of the executives passed over when Mr Mulally got the top job in 2006. When he was named in 2012, Mr Ford praised Mr Fields' decision to stay at the company.
"There was a lot of speculation about whether he was capable. To his great credit, he stuck to it, he learned from it and showed tremendous fortitude in grinding through an incredibly difficult process," Mr Ford said.
This marks the second change in leadership at the top of one of the Detroit automakers this year. Mary Barra took over as chief executive for Dan Akerson at General Motors in January.
Mr Fields joined Ford as a market research analyst in 1989 and quickly rose through the company's ranks. Less than a decade later, in 1997, he was running the company's operations in Argentina.
In 2000, he became the youngest chief executive ever at a Japanese company when Ford installed him as head of Mazda, which Ford controlled at the time.
There, he oversaw the catchy "Zoom Zoom" ad campaign. He was later head of Ford's European division and its luxury brands, which struggled with losses despite his tough medicine, including the closure of a historic Jaguar plant in Britain.
Mr Fields returned to Ford's Dearborn headquarters in 2005 to become president of the Americas.
As the company struggled to make a profit, he hashed out a plan to turn around Ford's money-losing North American operations by closing factories, laying off thousands of workers and using Ford's design expertise in Europe to build better cars.
Supporters say Mr Fields is an excellent strategist with a deep knowledge of the business. His international experience is invaluable as Ford restructures its European operations and focuses on growth in volatile young markets such as Asia and South America.
He is friendly and polished, with sharp suits and a bit of a swagger. He was born in Brooklyn, New York, the youngest of three sons.
At the New York Auto Show in April, he showed a home movie of his family at the 1964 World's Fair in the city. He remembered the excitement of the crowd when he was lifted on his father's shoulders to see the new Ford Mustang.
Like Ms Barra, who became the first female chief executive of a big automaker at GM, Mr Fields will be breaking a mould at Ford. He is the first Jewish chief executive at the 111-year-old company.