Max Mosley will step down as president of the International Automobile Federation (FIA) in October.
Mosley's post involves all international motorsport
In a statement, the FIA said Mosley had announced he would resign at the end of the current Formula One season.
But Eddie Jordan has urged Mosley to reconsider his decision to step down, saying it was a "difficult time in F1".
Michael Schumacher also expressed his surprise at Mosley's decision. "I think Max has been very good in what he has been doing," said the world champion.
Reports have claimed that Englishman Mosley is lining up Ferrari boss Jean Todt as his successor.
"There have been maybe times I haven't agreed with him but in general for the sport I think he has achieved a lot in terms of safety and the reputation of Formula One.
"It will be interesting to see who will replace him, whether we are going to have an improvement or not, but it will be difficult to replace Max in my view."
In the last year, former lawyer Mosley, 64, has driven through a swathe of changes to F1.
Several of these have been opposed by teams who claimed the changes were a knee-jerk reaction to Schumacher's long run success at Ferrari.
Further reforms agreed in May for the 2008 season will see a new engine format, a single tyre supplier and a ban on electronic driver aids.
Mosley says the changes will ensure closer racing and more overtaking.
Mosley first became FIA president in 1993 on a four-year
term and was re-elected in 1997 and 2001 to lead an organisation celebrating its centenary this year.
The suave and highly intelligent English barrister has for decades been close to Bernie Ecclestone, Formula One's commercial supremo, and his departure will be seen as the end of a formidable double-act.
Son of the British pre-war Fascist leader Oswald Mosley and Diana Mitford, Mosley was an amateur Formula Two driver and later co-founded the March Formula One team.
He quit the company in 1977 and went on to take prominent role in motorsport politics, initially in the team's organisation FOCA.
He was a prime mover in the 1980-81 conflict between motorsport's governing body, then called FISA, and FOCA, and played a key role in drafting the Concorde Agreement that ended that dispute and is the document by which the sport is still governed.
He then became president of the FISA in 1991, before the FIA and FISA merged in 1993 with Mosley taking over the duel role of governing both.