The shock announcement comes as polling indicates her Labour Party party faces a difficult path to re-election on 14 October.
Ms Ardern choked up as she detailed how six "challenging" years in the job had taken a toll.
Labour MPs will vote to find her replacement on Sunday.
Ms Ardern, 42, said she had taken time to consider her future over the summer break, hoping to find the heart and energy to go on in the role.
Ms Ardern will step down by 7 February. If no would-be successor garners the support of two-thirds of the party room, the vote will go to Labour's lay membership.
Ms Ardern became the youngest female head of government in the world when she was elected prime minister in 2017, aged 37.
And a year later she became the second elected world leader to ever give birth while in office, after Pakistan's Benazir Bhutto in 1990.
She steered New Zealand through the Covid-19 pandemic and its ensuing recession, the Christchurch mosque shootings, and the White Island volcanic eruption.
Ms Ardern said the past five-and-a-half years had been the "most fulfilling" of her life, but leading the country during "crisis" had been difficult.
Also she said "no regrets" about her plans to quit as New Zealand leader, after a decision that shocked both supporters and critics.
Source: www.bbc.com
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