Martin Winterkorn said he was "shocked" by recent events and that the firm needed a "fresh start".
He added that he was "not not aware of any wrong doing on my part" but was acting in the interest of the company.
VW has already said that it is setting aside €6.5bn (£4.7bn) to cover the costs of the scandal.
The world's biggest carmaker admitted last week that it deceived US regulators in exhaust emissions tests by installing a device to give more positive results.
The company said later that it affected 11 million vehicles worldwide.
"I am clearing the way for a fresh start with my resignation," Mr Winterkorn said in his statement.
He said he was "stunned" at the scale of the misconduct in the group but that he was confident that VW would overcome this "grave crisis".
"The process of clarification and transparency must continue. This is the only way to win back trust," he continued.