Bosnia-Hercegovina PM Nikola Spiric, an ethnic Serb, has quit in protest at an international envoy's efforts to introduce reforms supported by the EU.
Mr Spiric said his resignation was "the only right decision"
The envoy, Miroslav Lajcak, last month pushed through measures aimed at speeding up decision-making in Bosnia's often fractious central parliament.
But Bosnia's Serbs fear the changes will mean they lose influence to the country's other main ethnic groups.
The current crisis is said to be Bosnia's worst since war ended in 1995.
The Dayton accord that concluded the conflict left Bosnia-Hercegovina effectively divided between a Bosnian Serb entity and a Muslim-Croat federation, linked by a weak central government.
Under the accord, ultimate jurisdiction over the country was granted to an envoy appointed by the EU and the UN.
The international High Representative has the power to sack ministers and push through legislation.
The current envoy, Mr Lajcak, is a Slovak diplomat who has been trying to strengthen the ability of Bosnia's central government to adopt reforms that could eventually lead to the country's entry into the EU.
His proposals have triggered outrage among Bosnia's Serb leaders, who say the measures would reduce their influence in the country's central institutions and lead to Muslim domination.
The past week has seen hundreds of Bosnian Serbs take to the streets in protest against the reforms.
Mr Spiric's administration is the first to run Bosnia without international supervision since the end of the 1992-95 war.
In his resignation speech on Thursday, he said: "For 12 years foreigners run this country and this is not good."
"I resign and this is the only right decision."