Ardern's last day as prime minister is Feb. 7. Her resignation will take effect on the appointment of a new prime minister.
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Ardern said, after five and a half years of the top leadership role, that she could not keep going for another year or term after careful consideration.
A caucus vote to elect a new leader will occur in three days' time on Sunday, said a government statement.
"Being prime minister has been the greatest honor of my life," Ardern said, citing her cabinet's achievement in alleviating child poverty, as well as increasing welfare support and public housing stock.
Meanwhile, New Zealand's 2023 General Election will be held on Oct. 14, 2023, Ardern announced, adding the Labor team is "incredibly well placed" to contest the next election.