Luigi Di Maio said he had finished his work, that an era had ended, and that he would trust his successor to lead the party going forward.
"It's time for the 5-Star Movement to be refounded," he told a gathering of party faithful in Rome, ending days of speculation that he would step down as party leader while remaining Italy's foreign minister.
The 5-Stars have been in crisis for months, most acutely since the movement flipped coalition partners in September. But even earlier, it was beset by infighting and has seen the defections or expulsions of 31 lawmakers since the party won 33% of the vote in the 2018 election.
It was the 5-Stars' biggest victory nationally since its birth as a grassroots, anti-establishment protest movement led by comic Beppe Grillo.
Analysts have long said the party has struggled to pivot into an effective governing force, hobbled by its uneasy governing alliances first with the right-wing League party and, since September, with the center-left Democratic Party. In the process, it has alienated voters by defying some of its core values.
The conflict came to a head a few days before a regional election this weekend that is likely to see Matteo Salvini's League party score well in the traditional leftist stronghold of Emilia Romagna.
Latest polls showed the League and the Democratic candidate running close.
Analyst Massimiliano Panarari, writing Wednesday in the La Stampa newspaper, said a decision by Di Maio to step aside now as party leader would spare him blame should the candidate closest to the ruling coalition, Democrat Stefano Bonaccini, lose.
Panarari said Di Maio is the "natural scapegoat," because he has collected so many jobs — deputy premier, labor minister and minister of economic development in the first 5-Star government, and now foreign minister.
The 5-Stars' support has now shrunk to polling nationally only around 15-16%.
Premier Giuseppe Conte said he respected Di Maio's decision, while dismissing suggestions that his resignation as party leader could destabilize the government.
"Certainly, I would be sorry on a personal level," he told RTL102 radio.
Emiliana De Blasio, a communications sociologist at Rome's Luiss University, said Di Maio's downfall is linked to the fact that he rose in party ranks representing the movement's right-wing, and as such could work with Salvini when the League was in the government.
"The rapid fall is probably best represented by the fact that the government in this moment is made up of an alliance with the Democratic Party, so the whole 5-Star Movement seems to have moved towards the center-left," she said.
De Blasio noted that Di Maio never finished university and had no relevant work experience before being selected to head the party, a prime example of the fluid, non-traditional leadership ethos that guides the 5-Stars.
While he is capable and clever, "the 5-Star Movement is made up of many personalities, and Di Maio is only one of the personalities," she said.