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One of the most important designers in the history of American fashion, Donna Karan, is stepping down as chief designer of Donna Karan International.

Karan, 66, plans to devote greater time to her Urban Zen company and foundation, but will remain a close adviser to DKI under a long-term agreement, according to the company.

The designer created a modern system of dressing for legions of successful women, while establishing a tremendous rapport with her customers, which continues to this day.

Karan cofounded DKI with her late husband Stephan Weiss and Takiyho Inc. in 1984. In 1996, DKI went public on the New York Stock Exchange, and in 2001, LVMH Moët Hennessey Louis Vuitton paid $243 million for all outstanding shares in DKI, plus $400 million for Gabrielle Studio Inc., the licensor of the Donna Karan trademarks.

“LVMH and I have made this decision after much soul-searching,” said Karan on Tuesday. “I have arrived at a point in my life where I need to spend more time to pursue my Urban Zen commitment to its fullest potential and follow my vision of philanthropy and commerce with a focus on health care, education and preservation of cultures. After considering the right time to take this step for several years, I feel confident that DKI has a bright future and a strong team in place.”

Pierre-Yves Roussel, chairman and chief executive officer of LVMH Fashion Group, said, “Since 2001, LVMH and Donna Karan have partnered to develop Donna Karan International into a global business. It has been a privilege for all involved to collaborate with Donna and we are very pleased she has agreed to remain an adviser. We are committed to fully realizing the potential of the company while staying true to the spirit and value Donna has championed for more than 30 years.”

Caroline Brown, ceo of DKI, added, “Donna Karan is a visionary designer, who changed the way women dress by redefining power and sensuality. Her influence has been extraordinary and will continue to inspire for years to come. As she steps into this new role, I speak for the many teams at DKI in supporting her great legacy and reinforcing our commitment to it for our next chapter.”

At the present time, DKI won’t seek a successor for Karan as chief designer of Donna Karan Collection and will suspend that brand’s runway shows and collections for now. The company plans to continue to support the Karan brand through its strong license business. DKI will also reorganize its teams and structure in order to substantially increase its focus on the DKNY brand.

Ironically, Karan’s fall 2015 designer collection was deemed to be one of her best. “The opening look might as well have been a chic sandwich board heralding, ‘I’m back!’” wrote WWD in its review, which praised her tailoring, “spectacular outerwear,” dresses and blouses with volume, untricky layers, and “two black strapless evening gowns that were better than beautiful.”

In April, DKI made a design switch at DKNY, replacing Jane Chung, executive vice president of design at DKNY, with Dao-Yi Chow and Maxwell Osborne, founders and creative directors of Public School, the buzzy men’s wear brand. When they were hired, it was reported that they would report directly to Brown. September will mark their first DKNY collection.

According to sources, DKI may be considering merging the Donna Karan Collection into DKNY and offering a broader range of price points — a similar, but opposite tack taken by sister brand Marc Jacobs, which is incorporating Marc by Marc Jacobs into the Marc Jacobs collection.

It’s been a 31-year labor of love for Karan, a whirlwind of creative energy, who transformed the way women dress, while riding the ups and downs of her fashion company.

RELATED STORY: Donna Karan Talks 30th Anniversary >>

She launched her signature collection in May 1985 after a run as codesigner with Louis Dell’Olio at Anne Klein. Her concept revolved around a jersey bodysuit and several interchangeable items that she called her “seven easy pieces.” Designing lifestyle pieces, rather than simply clothes, Karan set out to dress the woman from head to toe and developed personal relationships with her customers. In the early days, it was not unusual for Karan to be in a retail store, with pins in her mouth and down on her knees, personally fitting a customer in the dressing room. Her signature pieces have always been black cashmere, leather, stretch and molded fabrics, as well as silhouettes that wrap and sculpt the body.

“For me, the body was very important — and clothing with comfort and fit. So thank God for stretch. I was the first person to put stretch into fabric,” she said during a discussion at The New School’s Parsons School of Design last year.

“The great thing about being a woman designer is you can be selfish and design for yourself,” she said. For example, questions such as “How do I dress the leg?” inspired Donna Karan Hosiery, and “the right bra?” inspired Donna Karan Intimates. “The perfect glasses” did the same for Donna Karan Eyewear. The launch of DKNY was also a personal thing for Karan. “When I did Donna Karan, my daughter was stealing all my clothes and she needed clothes and I needed jeans that I couldn’t find in the market. I put a blazer with a pair of jeans because I wanted to see what else there was to wear with jeans,” said Karan at Parsons.

That was the beginning of DKNY, which was founded in 1989 to appeal to the contemporary market and her daughter, Gabby. Designed to be fast fashion with an urban mind-set, DKNY went on to launch a plethora of labels, such as DKNY Jeans, DKNY Active, DKNY Underwear and DKNY Kids. Both DKNY and Donna Karan Collection became well-known for their groundbreaking ad campaigns.

Karan, who received an honorary doctorate from her alma mater, Parsons, has frequently been a proponent of shifting fashion’s delivery cycle to bring clothes into stores in-season. She has been a relentless advocate of the move for years, which at times earned her the nickname “fashion radical.” The onslaught of early markdowns and the reluctance of shoppers to spend, especially on clothes that may be discounted by as much as 70 percent by the time they should actually be worn, has always been one of her pet peeves.

Over the years, DKI became known for its atmosphere of creative chaos. When Weiss was alive, he provided a sense of calm to Karan’s frenetic energy. When he and Karan took the company public, they continued to privately control Gabrielle Studio, a separate company they formed that owned the Donna Karan trademarks. Once LVMH took over DKI and Gabrielle Studio, there were always rumblings that LVMH might one day replace Karan in her design role and make her an ambassador for the brand. But, to put it simply, Karan has never wanted to be pushed to the sidelines.

Even as those rumors escalated in recent months, the designer told WWD in an interview in March: “I’m married to my company; I’ll be married to my company whether I’m there or not there. I love the company, it’s my baby. Am I still going to design there? I assume so. I’m working on resort right now; I’m working on next spring.”

During that interview, Karan told WWD that she believed that she could continue to work at the company, even though she had no plans to devote all her time to it. “I think the beauty of what I’m able to do, and similar to that of Karl [Lagerfeld], I can multitask,” said Karan. “Do I have to be there 24/7? I don’t think so. Because of the way the schedule works, I’m able to do my work and able to live. If it was at the point where I had to be at that office 24/7, no I couldn’t do it.”

When she’s not in New York, Karan spends much of her time in Parrot Cay in Turks and Caicos, East Hampton and Haiti.

Throughout her career, Karan has cultivated many social and philanthropic causes that have pulled her away from the day-to-day role of designing. She founded the Urban Zen Initiative, which advances wellness and culture and empowers children. She’s also an honorary ambassador to Haiti and works closely with the Clinton Global Initiative to support and develop Haitian artisan commerce. She was instrumental in getting the ball rolling for several major projects, among them the first Seventh on Sale benefit to raise funds for AIDS awareness and education, and Kids for Kids, the carnival-type event that helps the Elizabeth Glaser Pediatric AIDS Foundation. She also underwrites Super Saturday, the annual designer sale in the Hamptons that she started with the late Liz Tilberis to benefit the Ovarian Cancer Research Fund. President Clinton presented her the Clinton Global Citizen Award, and she also received the Gordon Parks Foundation Award for using creative means to change the world.

Urban Zen is a stand-alone company owned by Karan herself. The collection features seasonless basics in a neutral color palette and corresponding jewelry, accessories and home decor handmade by artisans employed by Urban Zen. A yoga line will be launched in the fall. Many of the goods are produced in Haiti, Thailand and Bali.

“As I have become more involved with my Urban Zen Foundation and company, it has been a challenge to balance it all. The clock is ticking. I have so many commitments and projects that require my full attention at Urban Zen, as well as my time-consuming philanthropic pursuits in health care, education and preservation of culture. There are only so many hours in the day,” added Karan.

A major indicator of the changes taking place at DKI occurred in May when Karan’s executive vice president of global public relations and communications, Patti Cohen, resigned from the company. Her alter-ego as well as best friend, Cohen had been by Karan’s side for 30 years and a guiding force in her life, personally and professionally.

Last summer, DKI shut the doors of Karan’s 11,000-square-foot three-level Collection flagship store at 819 Madison Avenue in New York, but Collection stores remain in Las Vegas, Southcoast Plaza in Costa Mesa, Calif., Manhasset, N.Y. and London.

From the start, DKI has seen its share of senior management come and go, after varying degrees of success. Among them were Julie Stern, Fred Wilson, Michael Lichtenstein, Jeffry Aronsson, Stephen Ruzow, John Idol, Pino Brusone, Mark Weber, and now Brown. In the March interview, Karan said, “It’s frustrating to see the potential of a company [and to] not reach its potential.”

DKI struggled for several years after it went public, resulting in a change in strategy toward licensed divisions and broader product distribution to help offset royalty payments made to the designer. Well after the deal was struck with LVMH to acquire Karan, executives at the French luxury goods group were said to be surprised to learn the amount of off-price distribution of the brands, as well as the high expenses related to the management of the company.

In a WWD interview last September, Roussel acknowledged that LVMH had not maximized the expansion potential of DKI over the last 14 years. “We’ve grown the brand nicely, we’ve invested, but we’ve not made a step change,” he said. “We make a step change when we feel we have the equation right, like we did with Céline or with others.”

At the time of Brown’s appointment, Roussel said he intended to partner with her and Karan to find the right path to catapult DKI, including deciding “what we want to keep, and what we want to discontinue.”

“We’re probably doing too many things in too many directions, and in my experience, it’s much better to do fewer things but to do them really well….The brand architecture has to be looked at. I think it has to be clarified,” said Roussel, referring to the various subbrands and capsules that have sprouted over the years. At the time, Roussel said he intends to reinforce the “strong” and distinct identities of the Donna Karan and DKNY brands, and said it was too early to talk about any changes in creative leadership. “We’ll be looking at everything,” he said. “We are challenging ourselves; there is nothing taboo, and each time we do projects, we are willing to change what needs to be changed. And we’re doing it openly with Donna, who has built an incredible brand. The brand carries her name, so she’s part of it, whatever shape and form it will take, there’s no question,” he continued. “Then in what creative configuration, we’ll see, but I think she can still bring a lot.”

On Tuesday, Karan said, “Donna Karan is a part of me, past, present and future. It has been an honor to speak woman to woman about ‘Seven Easy Pieces’ that forever changed the way women dress. I want to express my gratitude and my deepest feelings to the dozens and dozens of colleagues over the years who have helped take Donna Karan New York far beyond my wildest dreams.”

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