Jobs made the announcement in a letter to the Apple Board of Directors Wednesday afternoon saying he could "no longer meet my duties and expectations as Apple's CEO."
Current Apple COO Tim Cook has been named as Jobs' successor and Jobs has been elected board chairman.
"I believe Apple's brightest and most innovative days are ahead of it," Jobs said in the statement. "And I look forward to watching and contributing to its success in a new role."
While he thinks Jobs' transition from CEO to chairman of the board means that he will no longer be involved in Apple's day-to-day business, tech analyst Larry Magid believes that Jobs will still be very active when it come to making decisions about product approvals and other major decisions.
"It's hard to imagine Jobs being on the sidelines, as long as he's able to breathe, so to speak," Magid said.
Apple declined to comment on the announcement beyond announcing that they had honored Jobs' request to name Cook as CEO.
Tech analysts have questioned how the announcement relates to Jobs' health struggles. Jobs has been battling pancreatic cancer since 2004 and received a liver transplant in 2009. He took his third medical leave at the beginning of this year.
"Steve Jobs is known as one of the greatest CEOs of all time," Mashable editor Ben Parr said. "The question is No. 1, hopefully Steve Jobs is OK and then No. 2, what is going to happen to Apple next? What is going to happen to Apple in the markets tomorrow? How is Apple going to move on without its visionary leader?"
Jobs, one of Apple's founders, was ousted from the company in the 1980s. He returned in the late 90s and rejuvenated the company with iconic products like the iMac, iPod, iPhone and most recently, the iPad. Jobs also helped build the image of the Silicon Valley; he is well known for favoring his trademark jeans and black mock turtleneck over the business suits preferred by other company heads.
Cook's succession is not a surprise to those in the tech industry, Parr told ABC7 Wednesday afternoon, adding that the two have been working on a transition plan for years.
"Steve Jobs has imparted his culture and his philosophy into Apple so deeply, it will run just fine," Parr said.
But while Cook was an engineer and is considered a supply chain expert, CNET editor Molly Wood wonders if he will be able to fill Jobs' shoes and run the company with the same style and energy level.
"Tim Cook could never do what Steve Jobs did for Apple," Wood said. "I don't see him as the kind of person who could ever have the focus, the kind of maniacal dedication; when you look at Steve Jobs, he's really, he's a different kind of leader, he's not just a business person, he's someone who really thinks about the kind of human experience. He tells you what you want to think."
Apple's stock has fallen in after-hours trading.