Mr Premji, chairman of Wipro, the IT services giant, said he would transfer shares worth $1.95 billion (1.25bn) to the Azim Premji Foundation.
India's economy has surged in recent years, creating a new class of super-wealthy entrepreneurs. India's newly rich - Forbes magazine says India now has 69 billionaires - have been criticised for lagging in charitable giving.
The foundation will use the money to fund education and other initiatives in rural India as well as a new university it is establishing in Bangalore.
"We believe that good education is crucial to building a just, equitable, humane and sustainable society," Mr Premji said.