James Murdoch quits News International
The newspaper publisher has been tainted by phone-hacking allegations, BBC News reports.
The scandal led the company to close its News of the World title in July last year.
Mr Murdoch will remain as deputy chief operating officer of parent group News Corporation, run by his father Rupert.
'Too big'
James Murdoch, 39, said: "I deeply appreciate the dedication of my many talented colleagues at News International who work tirelessly to inform the public."
He added that the launch of a new Sunday edition of the Sun and "new business practices" put the company in a "strong position" for the future.
The Labour leader Ed Miliband said it was "right" that James Murdoch had resigned.
"News International thought it was too big to be challenged, including by politicians. That's why we need new rules in place at the end of all this process so that one organisation cannot control that much of the newspaper and television market," Mr Miliband said.
Last year, James Murdoch twice appeared before the UK Parliament's Culture, Media and Sport Committee to answer questions as part of its inquiry into the phone-hacking scandal.
Rupert Murdoch, chairman and chief executive of News Corporation, joined his son at one of the hearings.
Paul Connew, a former News of the World deputy editor, said he was not surprised that James Murdoch had stood down.
"I think you've got to look at the bigger picture here," said Mr Connew.
"Quite clearly there's going to be criticism of James Murdoch in the culture and media select committee report, which presumably will be coming out in the not too distant future, and I think essentially he's been moved out of the firing line."
Details at http://www.bbc.co.uk/news/business-17209375