The 72-year-old, who coached Scotland between 1993 and 2001, will join the board at Pittodrie as a non-executive director, while his assistant Archie Knox will also leave the club
The 72-year-old coached Scotland between 1993 and 2001 after being appointed as Andy Roxburgh's assistant with the national team in 1986.
Brown went on to manage Preston and Motherwell before landing with the Dons but will call time on a 36-year coaching career in the summer in favour of a non-executive director role on the Aberdeen board, with assistant manager Archie Knox also leaving the club.
"Having reflected long and hard on the situation, I felt the time was right for me to step down as manager," he told Aberdeen's official website. "I feel it is important this is out in the public domain as I do not want anything to distract from the playing side over the next few weeks.
"Archie and I are determined to do whatever we can to help the team finish 2012-13 on a high and we strongly believe we will be leaving a solid base for the next management team to build on."
Brown will aid the board in their search for a new boss, which will began immediately in order to ensure that his successor is in place in time to prepare for the 2013-14 campaign.
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"The staff throughout the club hold them in such high regard and they will certainly be a difficult act to follow. When Craig indicated that he would step down I asked him to become a non executive director and I am delighted to say this will take effect immediately.
"Craig will have input to all areas of the club like any other board member and will be a fantastic ambassador for Aberdeen Football Club. As a board member he will play a full role like the rest of the board in choosing his successor."