Mr. Pepper, who once held the chief executive's position, had retired in 1999 before re-emerging as chairman when former Chairman-CEO Durk Jager resigned in June 2000.
Mr. Lafley, 54, became CEO at the same time.
Mr. Pepper will remain a director and chairman of the board's executive committee for another year.
Additionally, P&G made two other moves to account for the changes at the top: Bruce L. Byrnes, 54, president-global beauty and health care, and R. Kerry Clark, 49, president-global market development and business operations, take on the additional titles of vice chairman.
The two vice chairmen will be responsible for various external relations duties now handled by Messers. Pepper and Lafley in addition to their current roles.