The move was expected. Obama won the presidency last week over Republican John McCain.
Under state law, Democratic Gov. Rod Blagojevich will name Obama's replacement for the remaining two years of his term. Blagojevich has said he expects to make a decision by year's end, and has ruled out appointing himself. Obama is the only black senator.
His resignation reduces the Democratic majority to a bare minimum for the post-election session that begins next week. The party retains control as long as Independent Sen. Joseph Lieberman of Connecticut sides with them.
The irony of that is that several Democrats favor punishing Lieberman for his speech at the Republican National Convention this summer and for some of the remarks he made critical of Obama in the course of the presidential campaign.
But Obama has sought to stay out of that debate and his spokesmen have said he doesn't hold any grudges.
Potential candidates to replace Obama are Rep. Jesse Jackson Jr., Rep. Jan Schakowsky, Illinois Senate President Emil Jones and Illinois Attorney General Lisa Madigan.
On Tuesday, Obama appeared with another potential replacement, Iraq war veteran Tammy Duckworth, to commemorate Veterans Day. She is a former congressional candidate and head of the Illinois Department of Veterans' Affairs.
A day later, Obama friend and adviser Valerie Jarrett made it known that she's not interested in the Senate seat.
Obama's aides say his Senate office will remain open for a while so that staffers can archive Senate documents for Obama's future presidential library and contact constituents. It will close some time within the 60 days after the resignation becomes effective Sunday.