The 55-year-old has been in the role for 10 years and believes it is time for somebody new to step up and bring fresh ideas to the table with Ed Woodward being chosen to take over
The 55-year-old joined the board in February 1997 as finance director, and has been in his current role at Old Trafford since September 2003. He will however remain as a director at the club.
Gill has been nominated as the FA's candidate in the upcoming 2013 UEFA Executive Committee elections, and admits it was a "very hard decision to leave a club where he has experienced "such highs."
"It has been the greatest privilege to serve Manchester United for 16 wonderful years – the last 10 of which as its chief executive," he told the club's official website. "I have worked alongside the finest manager in the history of the game and been part of what I consider to be the best club in the best sport in the world.
He added,"It has been a very hard decision because I love this club and, as the fans' banner says, it is, 'more than a religion'. I've experienced some incredible highs, such as the Treble in 1999 and the League and Champions League double in 2008, and lows, like losing the title with the last kick of the season last year. But that is what makes this club and this sport so compelling."
"However, I have always been conscious of the fact that, as a member of staff, I was always just a temporary custodian of this marvelous institution. I am also of the view that all businesses need to refresh themselves with new management and ideas and after 10 years in charge I believe it is appropriate for someone new to pick up the baton."
"I'd like to thank the Glazer family and my fellow directors for all their support over the years."
Sir Alex Ferguson says he wishes he could have persuaded Gill to stay, and will be a "big loss" for the manager personally.
"David has been a magnificent chief executive," he told the club's official website. "Of course, we have had a million arguments, but I have always enjoyed them because I know that David has two great qualities: he is straight and he always puts Manchester United first.
"No disagreement is ever personal with him. He always wants the best for United, whether it's the players, the training ground or the staff.
"Him stepping down is a big loss to me but the fact that he is staying on the board encourages me that the reason for his departure is heartfelt, that he believes it is time for the club to move on. If I could have found a way of persuading him to stay I would love to have done that. But he has made his decision and I respect him for it."