The 85 year old leader of the Catholic Church, who was elected Pope in 2005, will step down within the next two weeks.
The news has been confirmed by officials at the Vatican in Italy and by the religious leader, who has given the date of his retirement as 28 February (13).
In a statement, Pope Benedict blames the move on his failing health and reveals he will be dedicating the rest of his life to prayer.
He says, ""(This is) a decision of great importance for the life of the Church. After having repeatedly examined my conscience before God, I have come to the certainty that my strengths, due to an advanced age, are no longer suited to an adequate exercise of the (role)... In today's world, subject to so many rapid changes... both strength of mind and body are necessary, strength which in the last few months, has deteriorated in me to the extent that I have had to recognise my incapacity to adequately fulfil the (role)...
""I thank you most sincerely for all the love and work with which you have supported me... and I ask pardon for all my defects... With regard to myself, I wish to... devotedly serve the Holy Church of God in the future through a life dedicated to prayer.""
Vatican officials have confirmed they will treat the resignation like a death and it will signal a new election process.
Pope Benedict XVI's resignation makes him the first head of the Catholic Church to step down in almost 600 years.