His resignation came after nearly 100 people were killed when security forces stormed two camps set up by supporters of Morsi as part of their campaign for his reinstatement.
"It has become too difficult to continue bearing responsibility for decisions I do not agree with and whose consequences I fear," ElBaradei, 71, said.
He said "there were more peaceful means" to solve the country's crisis.
ElBaradei announced his resignation in a letter to the interim president.
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"Unfortunately those who gain from what happened today are those who call for violence and terror, the extremist groups," he said.
The letter of resignation which was propagated on social media included his severe objection to the use of religion in politics which, according to him, resulted in one of the worst years for Egypt.
He said his resignation comes at a time when division threatens the social fabric and violence begets violence.
The interior ministry issued a statement earlier saying security forces were taking "necessary measures" against the protesters, who want Morsi reinstated, at the Rabaa al-Adawiya mosque in the east of Cairo and the protest in Nahda Square.
Conflicting reports emerged over the number of people killed today.
Security forces said 95 people have been killed and 758 injured. However, Morsi's Muslim Brotherhood claimed the death toll was as high as 2,200, with about 10,000 injured.
Bulldozers were said to have been used to uproot the camps that had been in place after 62-year-old Morsi was ousted by the military on July 3.