Abdullahi Yusuf made the announcement in a speech Monday before parliament in Baidoa — one of the only towns controlled by the weak government. The speaker of parliament will stand in as acting president until elections are held, he said.
"When I took power I pledged three things," Yusuf said in his address, which was broadcast on radio across the country.
"If I was unable to fulfill my duty I will resign. Second, I said I will do everything in my power to make government work across the country. That did not happen either. Third, I asked the leaders to cooperate with me for the common good of the people. That did not happen," he said.
He said he would hand in his resignation letter later Monday.
Yusuf's administration failed to bring security to the war-ravaged nation and now only controls pockets of the capital, Mogadishu, and Baidoa. A powerful Islamic insurgency controls most of the country.
The most aggressive Islamic insurgency group, al-Shabab, have made dramatic territory gains in the past few months.
The U.S. State Department says al-Shabab's leaders have links with al-Qaida and are harboring men who conspired to blow up American embassies in Tanzania and Kenya 10 years ago, killing hundreds.
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