"This will be my last broadcast," Dobbs said after giving the day's headlines. Dobbs, who hosts a daily radio show unrelated to CNN, said the network had allowed him to be released early from his contract.
Dobbs was a CNN original, signing on when the cable network started in 1980. For much of that time, he hosted a nightly business broadcast that became one of the most influential shows in the corporate world, and CNN's most profitable show for advertising revenue.
But Dobbs said his world view changed after the 2001 terrorist attacks and corporate corruption scandals, and he began to more freely express his opinions. He was particularly persistent in bringing the immigration issue to the fore, winning him both higher ratings and enemies. Latino groups had an active petition drive seeking his removal.
His presence became awkward for CNN, particularly as it began emphasizing reporting and non-opinion shows. He angered management this summer by pressing questions about President Barack Obama's birth site after CNN reporters determined there was no issue.
Dobbs said the decision came after months of discussion with CNN U.S. President Jon Klein. Dobbs said he wanted to concentrate on his role as a commentator and on advocacy journalism.
Klein hailed Dobbs' "appetite for big ideas, the megawatt smile and larger-than-life presence he brought to our newsroom."
"With characteristic forthrightness, Lou has now decided to carry the banner of advocacy journalism elsewhere," Klein said. "We respect his decision."
Dobbs said he was proud of his role in helping to build the first cable news network. He said some leaders in media, politics and business "have been urging me to go beyond my role here at CNN and to engage in constructive problem-solving."
Seated at an anchor desk in front of a screen with a fluttering American flag, Dobbs mentioned his interest in issues such as health care, jobs, immigration, climate change and the wars.
"Unfortunately, these issues are now defined in the public arena by partisanship and ideology rather than rigorous empirical thought and forthright analysis and discussion," he said. "I will be working diligently to change that as best I can."
His resignation was hailed by activists who were seeking his ouster.
"Our contention all along was that Lou Dobbs - who has a long history of spreading lies and conspiracy theories about immigrants and Latinos - does not belong on the most trusted name in news," said Roberto Lovato, co-founder of Presente.org. "We are thrilled that Dobbs no longer has the legitimate platform from which to incite fear and hate."
Tom Saenz, president of the Mexican American Legal Defense and Educational Fund, the leading Latino legal organization, said, "The Latino community can and should celebrate that Lou Dobbs is no longer on CNN."
U.S. Sen. Robert Menendez, a Democrat from Dobbs' home state of New Jersey and the Senate's only Hispanic member, called it "addition by subtraction" for CNN.
Dobbs did not immediately return telephone and e-mail messages to talk about his critics.
Although he joined CNN in 1980, Dobbs left the network for two years in 1999, after angrily complaining on the air about a decision by then-CNN President Rick Kaplan to switch away from his show to a live news event. An Internet venture failed and when Kaplan left CNN, Dobbs returned.
Dobbs' ratings had cooled from the height of the immigration discussion. But his 879,000 viewers on Tuesday still eclipsed MSNBC's Chris Matthews (Fox News Channel's Shepard Smith had more than double the audience) and even beat Campbell Brown's CNN show, which followed Dobbs at 8 p.m. ET in prime-time, according to the Nielsen Co.
A decision on who will replace Dobbs is expected to be announced Thursday.
Associated Press writers Mark Kennedy and Suzanne Gamboa contributed to this story.