UPDATE 2-Icahn quits Yahoo board, commends CEO

* Icahn says Yahoo no longer needs activist director

* Resignation from board effective immediately

* Yahoo shares fall 1.4 pct after hours (Recasts, adds Yahoo comments, background)

By Alexei Oreskovic

SAN FRANCISCO, Oct 23 (Reuters) - Billionaire activist investor Carl Icahn gave up his seat on the Yahoo Inc (YHOO.O) board of directors on Friday, closing a tumultuous chapter in the Internet company's 15-year history.

Icahn said in a letter to the board he did not believe Yahoo needed an activist investor as a director at this time, and that his attention was focused on other matters. The letter said his resignation was effective immediately.

Icahn won his seat on the board in July 2008, in the wake of Yahoo's protracted -- and ultimately fruitless -- talks with Microsoft Corp (MSFT.O), which had offered $47.5 billion to buy Yahoo.

Yahoo CEO Carol Bartz in January replaced Jerry Yang, who had rebuffed the software giant's offer. Instead, Yahoo and Microsoft announced a 10-year search partnership in July, in which Yahoo will use Microsoft's back-end search technology on its Web portal.

In his letter, Icahn said he believed the Microsoft transaction would provide great long-term benefits to Yahoo and commended Bartz on a great job.