“I want to make space to ensure the country has a government that is stable,” Kurz said in a televised press statement on Saturday.
The resignation comes days after prosecutors said Kurz was placed under investigation over government corruption.
On Wednesday, Kurz’s offices and the ÖVP's party headquarters were raided, as part of the corruption inquiry.
His coalition government’s junior partner, the Greens, asked him to step down and were seeking options to oust him, as they labeled him "unfit" for the position
Kurz nominated Foreign Minister Alexander Schallenberg to succeed him.
Sebastian Kurz has served as Chancellor of Austria since January 2020, a position he previously held from December 2017 to May 2019.
Kurz has also been chairman of the Austrian People's Party since May 2017.
Aged 35, Kurz is the youngest head of government in the world, and being first elected to the position at the age of 31, the youngest chancellor in Austrian history.