This post has been corrected. See below for details.
Irani, 78, has been with the company since 1983. He took over as chairman and chief executive in 1990 after the death of company founder Armand Hammer. He gave up the CEO post two years ago and was scheduled to retire from the company in 2014.
Aziz Syriani, the lead independent director of Occidental since 1999, also withdrew as a candidate for re-election to the board.
The board decided to replace the chairman position with Edward Djerejian, a director of the company since 1996 and a former U.S. diplomat who has served as an ambassador to Israel and an assistant secretary of State.
There had been speculation that Irani might retire sooner than expected after he ran afoul of some investors when he tried to replace the company's current chief executive, Steve Chazen, earlier this year. A number of analysts that cover the company accused Irani of mishandling succession plans.
The board earlier this week said Chazen would remain CEO through 2014.
Shares of Occidental rose $3.08, or 3.5%, to $91.16 in late-morning trading on the New York Stock Exchange.
[An earlier version of this post said Irani had voluntarily stepped down from the board. He was actually voted out by shareholders.]