Alenka Bratusek handed in her resignation today to the parliament's speaker after losing the leadership of her party.
The 44-year-old financial expert has steered the country, which is one of 18 European Union countries that uses the euro, through the region's debt crisis but resigned after losing the leadership of her Positive Slovenia party to Mayor Zoran Jankovic of Ljubljana, the country's capital.
Lawmakers must convene to acknowledge the resignation and the country's president will then have 30 days to appoint a new prime minister, or lawmakers can try to thrash out a new government.
"Citizens should decide who will lead the government," Bratusek wrote on her Facebook profile. "It is the only right solution."
Her centre-left government has cut public spending and helped shore up its ailing banks. However, more economic reforms lie ahead before Slovenia can safely say it has got its economy back into shape.
Bad bank loans are at the center of the crisis in the Alpine nation, which was once considered a model as to how to transition a centralized East European economy to the free market.