Jed Hoyer, who now serves as the club's executive vice president and general manager, will take over.
Epstein said in a statement he will "cherish" his time with the Cubs and said it was simply time to make a change.
Epstein, 46, has been with the Cubs for nine seasons.
He will be remembered in Chicago as the architect of the Cubs' 2016 World Series-winning team, the club's first in 108 years.
Epstein was entering the final year of his contract with the Cubs, who are poised for a potentially formative offseason; Kris Bryant, Anthony Rizzo, Javier Baez, and Kyle Schwarber are all heading into their last years of team control. "All of the things that have made this experience so special - the fans, the players, the managers and coaches, ownership, my front office colleagues, the uniqueness of the Wrigley experience, the history - make it so tough to leave the Cubs". "The timing is right for a number of reasons, and most importantly we are both thrilled that Jed is the person succeeding Theo."As a GM, Epstein also helped the Red Sox end their own 86-year championship dry spell and win the World Series in 2004".
The move isn't a complete surprise, as Epstein's contract was up after 2021 and he had meant to leave the Cubs then.
Epstein said after the season he anticipated remaining on the job for at least one more year, with his contract set to expire in 2021.
In a letter sent Tuesday to friends that was obtained by ESPN's Jeff Passan, Epstein said: "Next summer will be my first in 30 years not clocking into work every day at a major league ballpark". He added: "I do plan on having a third chapter leading a baseball organization someday, though I do not expect it to be next year".