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It is with regret that I accept Dr Kissinger's decision
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President Bush
Mr Kissinger, who had been in the job for just 16 days, had been criticised for refusing to release the names of clients at his consulting firm.
His resignation throws the inquiry into turmoil. It comes hard on the heels of the announcement earlier this week that the commission's vice chairman, George Mitchell, was quitting.
The BBC's Tom Carver in Washington says the episode is enormously embarrassing for Mr Bush, adding questions will be asked about why possible conflicts of interest were not raised before Mr Kissinger's appointment.
Controversial
"It is clear that, although specific potential conflicts can be resolved in this manner, the controversy would quickly move to the consulting firm I have built and own," Mr Kissinger wrote in a letter to President George W Bush, who appointed him.
"I have, therefore, concluded that I cannot accept the responsibility you proposed."
Mr Kissinger's appointment drew controversy when it was announced, just over two weeks ago.
Although Mr Kissinger is one of the United States' best known statesmen, he was seen by some as tainted not only by his business dealings, but also by his involvement in murky periods of the country's history.
In a statement, President Bush said: "It is with regret that I accept Dr Kissinger's decision to step down as chairman of the National Commission to investigate the events of 11 September 2001 and the years that led up to that event."
He promised to pick a new chairman to help "uncover every detail and learn every lesson of 11 September, even as we act on what we have learned so far to better protect and defend America".
Senator Mitchell is being replaced by another former politician, the Democrat Lee Hamilton.
But correspondents say finding a new chairman with enough clout to do the job properly but no other baggage will be difficult.
The 10-member commission has been given 18 months to examine issues such as aviation security and border problems, along with intelligence failures.
It was given a broad mandate, building on the limited joint inquiry conducted by the House of Representatives and Senate intelligence committees.
The commission was initially opposed by the White House but was set up following pressure from families of those who lost their lives in the attacks.