Social Democrat Rinne found himself in a hard place after the Finnish Centre Party, one of the coalition parties, made a decision to withdraw its backing for Rinne on Monday, saying its party had lost confidence in coalition with the prime minister.
The minister in charge of state-owned firms, Sirpa Paatero of the Social Democrats, resigned in November after it emerged she had failed to block the outsourcing.
That came amid revelations that she knew in advance of the postal company's plans to shift some workers to a lower-paying contract, and misled MPs about it.
Rinne had been under pressure for days over the Posti case and his role in the strike that ended on November 27 after a compromise deal was reached that allowed package handlers to remain under current work contracts for now.
"My biggest mistake has been that I've trusted only in the information I've been presented with", Rinne said, without elaborating.
The strike led to a one-day sympathy strike by the Nordic country's transport sector, including Finnair, which had to cancel nearly 300 flights.
It is not clear if Rinne was forced to resign or chose to do so himself. His government holds a comfortable majority of 117 seats in the 200-seat Eduskunta, Finland's parliament.
Niinisto accepted the resignation request but asked Rinne's Cabinet "to continue as a caretaker government a new government is in place".
Former union leader Antti Rinne was premier for less than half a year.
Lawmakers will decide on a new prime minister next week. Finland holds the rotating presidency of the European Union until the end of the year, playing a central role in efforts to hammer out a new budget for the bloc.
Rinne's five-party centre-left coalition took office just under six months ago after his Social Democratic Party (SDP) won April's parliamentary election by a whisker. Sanna Marin, the party's number two behind Rinne and the current minister of transport, has already said she would be willing to take over.
"All of the governing parties have confidence in me, except the Center Party". Marin, 34, a second-term MP from Tampere, has been Minister of Transport and Communications since June.
"After receiving that reply, I naturally reflected on what that meant for the government and I drew my own conclusions".
Finnish Prime Minister Antti Rinne resigned on Tuesday (3 December) after his handling of a postal strike soured relations between him and a member party of the ruling five-party coalition.