He will be replaced by current finance director Nick Read.
The announcement came as Vodafone reported an annual profit of €2.8bn (£2.5bn), compared with a loss of €6.1bn last year when it wrote down the value of its Indian business.
Mr Colao said it had been a "real privilege" to lead Vodafone.
He added he would be working flat out until his departure in October, but that he had no plans after that.
Mr Colao has presided over some major changes. In 2013, Vodafone sold its stake in Verizon Wireless to US telecoms group Verizon Communications for $130bn, which at the time was one of the biggest deals in corporate history.
Last week, Vodafone paid €18.4bn to buy Liberty Global's cable TV and broadband networks in Germany and Eastern Europe.
Mr Colao was appointed group chief executive in July 2008. Vodafone said that the company had been transformed by him from a consumer-focused 2G/3G mobile operator to one with global leadership in the "Internet of Things".
Its customer base has also doubled from 269 million to 536 million across 25 countries.
In a media conference call following the results, Mr Colao said: "It has been a real privilege to lead the group through a decade of massive strategic transformation culminating in today's good performance."
Vodafone's chairman, Gerard Kleisterlee, said: "On behalf of the board, I would like to express our gratitude to Vittorio for an outstanding tenure.
"He has been an exemplary leader and strategic visionary who has overseen a dramatic transformation of Vodafone.""
Source – BBC News
"The Vodafone Group Plc Board today announced the succession plan for the role of Group Chief Executive. Effective 1 October 2018, Vittorio Colao will be succeeded by Group Chief Financial Officer Nick Read. At the date of the Group's Annual General Meeting on 27 July 2018, Deputy CFO Margherita Della Valle will succeed Nick Read as Group Chief Financial Officer and will join the Board, and Nick Read will become Group Chief Executive-Designate."