Saakashvili was a passionate supporter of Ukraine's 2014 pro-EU revolution that ousted the Russian-backed president and set the former Soviet Republic on its westward course.
But he had repeated run-ins with some members of Ukrainian President Petro Poroshenko's inner circle and was frequently accused of having outsized political ambitions of his own.
The 48-year-old fluent Ukranian speaker who views Russian President Vladimir Putin as his arch foe hinted that he was stepping down because he was being held back from fighting corruption in the resort and port city of one million.
"But first, they took away most of his powers, and then they began harassing him from all sides."
More From This Section
Saakashvili said he had no choice but to resign under the circumstances.
But he later told reporters: "We will definitely unite and finish this fight, bringing victory to Ukraine.
"The fight continues," he said.
He also accused Poroshenko of "lying" to him by never keeping his promise to turn the Black Sea region into a tariff-free zone for overseas exports and imports.
The announcement is a double-edged sword for the Western-backed Ukrainian leader.
But it also underscores the level of state graft that penetrates the country almost three years since the start of a popular uprising that appeared to herald fresh change for one of Europe's poorest and most mismanaged states.
Saakashvili made himself into a US darling in Georgia by cleaning up the corrupt police force and setting the Caucasus country on a far more economically transparent road.
But Georgia's devastating loss to Russia in a brief 2008 war saw Saakashvili's star power dwindle to the point that he was beaten in a 2012 election and become the subject of a series of what he viewed as politically-driven investigations.
It was not immediately clear what political future Saakashvili envisions for himself or whether he intends to stay in Ukraine.