Prime Minister Jacinda Ardern will stand down from the role no later than early February.
She made the surprise announcement at a scheduled speech while on caucus retreat in Hawke's Bay.
"This summer, I had hoped to find a way to prepare for not just another year, but another term, because that is what this year requires. I have not been able to do that.
"I am announcing that I will not be seeking re-election and that my term as Prime Minister will conclude no later than the 7th of February."
Ardern said she would continue as Mt Albert MP until April, which would mean it would be spared a by-election.
By-elections are not triggered if a vacancy occurs within six months of the end of Parliament's three-year term.
Aged just 37 when she took the top job, NZ’s youngest leader had led the country through a pandemic, a natural disaster, and a terrorist attack. (Source: 1News)
Ardern said there was no "real reason" why she wanted to resign, only that she was "human".
"To Neve, mum is looking forward to being there when you start school next year. To Clarke, let's finally get married."
Ardern believed she "no longer had enough in the tank" to do the job justice, but there were colleagues who could.
Confident Labour can win October 14 election
Ardern said her Government had achieved a lot and she was not standing down because she did not believe Labour could win the next election, but because she believed it could.
The Labour caucus had agreed a vote on the leader would take place on January 22. If a leader was elected, Ardern would issue her resignation and an new prime minister would be sworn in.
An at-times visibly and audibly emotional Ardern thanked New Zealanders for the "opportunity" to fulfil the "greatest role" of her life.
Jessica Mutch McKay gives her assessment of today’s announcement. (Source: 1News)
She would not, however, be drawn on who she backed to replace her in the role.
Ardern said she had hoped she would find the energy to continue as prime minister but had concluded she would be "doing a disservice" to New Zealand if she continued.
She said the caucus was surprised but understood her reasons.
“I think they could see I’d given everything and they didn’t begrudge this decision.”
She wanted to remembered as “someone who always tried to be kind”.
Asked if she would take on a role at United Nations as had been speculated in some circles, she said her focus had been her premiership.
“I have no plans other than spending a bit of time with my family.”
She said the UN was not her ambition.
Her resignation announcement followed another: that the election will be held on October 14.
National Party leader Christopher Luxon reacted to the shock announcement on Twitter, offering thanks to Ardern for her "service to New Zealand".
"She has given her all to this incredibly demanding job and I wish her and her family all the very best for the future. Thank you Jacinda."
Grant Robertson's plans
Deputy prime minister Grant Robertson issued a press release shortly after Ardern's announcement saying he would not put his name forward to be Labour's leader.
“In 2014 when I failed to secure the leadership of the party for the second time I indicated that I would not put myself forward again. My position has not changed.”
He said he had “every confidence” there were colleagues in caucus able to fulfil the role in Ardern’s place, and who desired to “take it on”.
READ MORE: Timeline: Jacinda Ardern as Prime Minister
“They will have my full support.”
He said Ardern’s “intellect, judgement and empathy” would “mark her out as one of New Zealand’s finest leaders”.
Australian PM reacts
Australian Prime Minister Anthony Albanese took to Twitter to pay tribute to Ardern's leadership.
He said she had "demonstrated that empathy and insight are powerful leadership qualities.
"Jacinda has been a fierce advocate for New Zealand, an inspiration to so many and a great friend to me."
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