Wes Bush, who took over as Northrop chief executive from Ronald Sugar on January 1, said in a statement that the move will enable the maker of warships, submarines and unmanned spy planes to better serve customers.
The company said it was currently looking in the District of Columbia, Maryland and Virginia for a corporate office location, and expected to complete its search by spring 2010 and open the office by summer 2011.
Northrop Grumman, which has 120,000 total workers, said the new corporate office would include about 300 people. It added that about 30,000 of its employees work in California.
The move marks the latest corporate exodus of major aerospace and defense companies from Southern California, once the cradle of the industry.
It's a blow to our pride whenever you lose a Fortune 500 headquarters ... But if you still have a lot of the operations that is good news, said Jack Kyser, economist at the Los Angeles County Economic Development Corp.
Entrepreneurs like aerospace mogul Howard Hughes took advantage of the region's climate -- prime for year-round flying -- in the 1920s and 1930s to build up the aerospace industry, which continued to flourish after World War Two.
The landscape has shifted, however, since the Cold War.
Rival defense contractors Lockheed Martin Corp and General Dynamics Corp are already headquartered near the national capital with their respective offices in Bethesda, Maryland, and Falls Church, Virginia.
In a similar move to be closer to its federal government customers, Science Applications International in September moved its corporate headquarters to McLean, Virginia, from San Diego.
(Reporting by Karen Jacobs in Atlanta and Laura Isensee in Los Angeles; Editing by Tim Dobbyn and Steve Orlofsky)