Ballmer, 47, said the share sale, his first in 12 years, was aimed at diversifying his financial assets, according to a statement issued by Microsoft on Friday.
According to filings with the U.S. Securities and Exchange Commission, Ballmer sold 49.32 million shares of Redmond, Wash.-based Microsoft from May 21 to May 23, for a total of $1.19 billion.
Each share sold for between $23.89 and $24.67.
"Even though this is a personal financial matter, I want to be clear about this to avoid any confusion," Ballmer said in Friday's statement. "I remain excited about the potential for our technology to change people's lives, and I remain as committed to Microsoft as ever."
Ballmer is Microsoft's second-largest shareholder from the management ranks, behind Chairman Bill Gates.
According to the latest SEC filing, Ballmer still holds 421,519,622 shares in Microsoft after last week's sale, which is worth $10.45 billion, based on Microsoft's closing price of $24.79 on Tuesday.
Executives at Microsoft regularly sell shares of the world's largest software company. In February, for instance, Gates sold $96 million worth of stock. In March he sold another 1.9 million shares, leaving his stake at 1.2 billion shares.