Alam was on the edge of losing his post of director domestic cricket after the PCB decided to abolish this designation along with the position of director international cricket.
In 2008, Alam was appointed as Pakistan's coach but was replaced by Waqar Younis immediately after the country's disappointing tour of Australia in 2010.
This will be Alam's fourth managerial stint with the Pakistan team.
Previously, he accompanied the 1992 World Cup winning team as manager-coach, later was made coach in 2000 for a brief period and then had a surprise return in 2008.
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Talking to Dawn, Cheema confirmed that he had informed PCB chairman Shaharyar Khan about his decision of leaving the said post during a meeting on Friday.
Cheema said it was not possible for him to perform two jobs simultaneously.
"I wish good luck to Pakistan cricket with the hope that it will develop further on a positive note," Cheema stated.