Rebel Ulster Unionist Jeffrey Donaldson has quit the party along with two newly elected assembly members.
Huge gap: Mr Donaldson (right) has increased his attacks on leadership
The Lagan Valley MP told the BBC he was leaving the UUP with Arlene Foster and Norah Beare.
Mr Donaldson has been a thorn in the side of Ulster Unionist leader David Trimble since the moment he walked away from Castle Buildings just before the signing of the Good Friday Agreement in 1998.
It is understood he is considering taking up a long-standing offer to join the rival Democratic Unionist Party.
"I have written to the party chairman and told him that I cannot accept the ultimatum that was given to me and that I am not prepared to have the party expel me and therefore, with regret, I have resigned from the Ulster Unionist Party," he said.
"I have been a member of this party for over 20 years, but it is not the party I joined.
"It's a party that has abandoned its principles. It is a party which can no longer command the support of a clear majority of unionists.
"I do not see the Ulster Unionist Party ever again being the largest party in Northern Ireland."
In a statement, the Ulster Unionist Party said: "Jeffrey's decision is a matter of regret but it has not come as a surprise.
"His recent actions and comments culminated at last Friday's Executive meeting where he stated that he no longer trusted the Party.
"Jeffrey was a leading member of the party, he was a moderniser in the talks team right up to the last minute. Thereafter he lost his way.
"We wanted him to remain in the party, supporting the policies and democratic decisions of the party. He clearly felt unable to do so."
DUP leader Ian Paisley said he warmly welcomed the resignations.
"This is without doubt a momentous decision that will deal a hammer blow to the Ulster Unionist Party leaving them little more than a rump of Unionists badly out of touch with the views and aspirations of the majority of the unionist community."
The SDLP's Sean Farren said the resignation confirmed that the majority of unionist MLAs were now anti-Agreement.
In June, Mr Donaldson, David Burnside and Martin Smyth were suspended from the party after resigning the party whip at Westminster.
They did not support the Good Friday Agreement and called for Mr Trimble to change party policy or step down from the post.
In response, Mr Trimble said they should quit the party.
The rebel MPs challenged their suspension in the High Court, where it was ruled to be invalid.
In September, the 900-member Ulster Unionist Council met to discuss disciplinary action against the MPs.
They voted in favour of party leader David Trimble's motion calling for the MPs to again take party instructions in the Westminster parliament.
Mr Trimble denied there was a conspiracy to purge Mr Donaldson
The three MPs had called the meeting to try to stop disciplinary moves against them, but voting was not reached on their motion.
Mr Donaldson's best chance of toppling Mr Trimble appeared to have gone.
There have been increasing signs that senior party figures were running out of patience with Mr Donaldson whose attacks on Mr Trimble have increased following last month's assembly election.
Last week, the party's executive passed a motion calling on him to say if he would retake the party's parliamentary whip and support the policies of the party.
The executive voted in favour of the motion which said the Lagan Valley MP's behaviour had been detrimental to the interests of unionists.
The motion was carried with the backing of Mr Trimble after members of the executive voted 55 to 33 in favour of taking action against the anti-Agreement MP.
Mr Donaldson protested that the move was a "purge of him" as two other rebel MPs, Martin Smyth and David Burnside will not face similar action.
He said the party was no longer the broad church it had been and said he had been told to accept party policy or leave.
Mr Trimble denied that there was a conspiracy to purge Mr Donaldson from the party.
Also leaving the UUP is Arlene Foster, a party officer and honorary secretary, who is a close ally of Mr Donaldson.
She leaves with newly elected MLA Norah Beare, who used to work in Mr Donaldson's office.
While some of the party hierarchy will undoubtedly be pleased to see the back of Mr Trimble's number one opponent, many more anti-Agreement figures remain - including David Burnside and Martin Smyth.