Taro Aso resigned Wednesday as president of the Liberal Democratic Party (LDP).
At a press conference, Aso said: "Unfortunately, I have to stand down while I am still halfway through my mission."
He said that during his tenure of around one year, he tried his best as prime minister.
The LDP, frustrated by the defeat in the general election and faced with the huge task of renewal in opposition, will pick a new party president on Sept. 28, with candidacies set to be formally accepted on Friday.
As Aso has stepped down, LDP lawmakers will vote for Masatoshi Wakabayashi, chairman of the party's Joint Plenary Meeting of Party Members of Both Houses of the Diet, in the special Diet session scheduled later in the day to elect the next prime minister.
On Sept. 8, Aso said he would step down as party chief before the lower house elects the next prime minister in a special Diet session.
"Not only will my Cabinet resign en masse but I will also resign as party president," Aso was quoted as telling LDP executives at a meeting.
Following the DPJ's landslide victory in the Aug. 30 lower house election, Aso said he would quit to bear responsibility for the LDP's defeat in the election.