His resignation follows months of scandal and turmoil within the administration, including recent debate over Japan's aid to U.S.-led military action in Afghanistan.
In July elections, Abe's Liberal Democratic Party lost control of Japan's upper parliament. Abe listed the election defeat and recent chaos among his party as signs that he could no longer lead, reported the Associated Press.
On top of disagreement regarding military involvement, Abe's administration has been burdened with personnel difficulty.
Four of Abe's Cabinet ministers have resigned in scandals, including one who quit this month a week after being appointed, the AP reported. In May, Farm Minister Toshikatsu Matsuoka, who was allegedly involved with dishonest funding reports, hung himself.
Although Abe did not specify a date for his departure, the Liberal Democratic Party announced it would use a streamlined election process to choose his successor as party president, reportedly on Sept. 19, according to the AP.
Speculation has begun as to who his successor may be. Most popular is former Prime Minister Junichiro Koizumi, who led the country just before Abe. Abe's former foreign minister, Taro Aso, also has been named as a possible contender.
White House spokesman Tony Snow did not comment on the prime minister's resignation but mentioned that Japan would remain a key ally in U.S. foreign policy.
"We continue to work closely with the Japanese on a whole range of issues, obviously, and we will continue to do so," he said, according to the AP.