Postecoglou, who had come under fire as Australia failed to secure direct qualification to Russia, announced his decision just a week after the Socceroos had sealed their spot with a 3-1 playoff win over Honduras.
The 52-year-old spoke emotionally about the toll the job had taken on his family but did not otherwise elaborate on his reasons for leaving.
"After a great deal of thought and soul-searching, I've decided that the journey for me ends as Socceroos coach," he told reporters at Sydney Cricket Ground.
"As I've said many times, it's been the biggest privilege of my life and probably not the ending I had envisaged when we started. But at the same time, I know it's the right time for me and the right decision."
Graham Arnold, the coach of A-League champions Sydney FC, and Tony Popovic, who led Western Sydney Wanderers to the 2014 Asian Champions League title before taking over at Turkish club Karabukspor this year, will be the leading local candidates to replace him.
Postecoglou ended a run of four foreign coaches when he was appointed eight months before the 2014 World Cup. He overhauled the side and took a young squad to Brazil where they lost all their matches but acquitted themselves well.
More improvement followed and six months later the Socceroos gave the country its first major international soccer trophy by winning the Asian Cup on home soil.
Postecoglou passed up several opportunities over the last month to refute a local media report that he was planning to step down and said on Wednesday he had been talked out of quitting immediately after the Honduras win.
BIG SHOES TO FILL
Football Federation Australia chief David Gallop said he was confused as to why Postecoglou had decided to cut short his reign before the end of his five-year contract next July.
"I'm disappointed and I guess still a bit puzzled, but I'm supportive of the notion that sometimes you reach a point where you just know that you need to do something new," he said.
"It's my privilege, on behalf of everyone in Australian football, to thank Ange for the past four years. Ange's record speaks for itself."
Greek-born but Australian through and through, Postecoglou said he had taken great pride in proving that a local could do the job. He said he would be looking for a new post in club football, probably abroad.
"Whether people like it or not, it's undeniable that we play different football today than we did four years ago. They have been my markers all along," Postecoglou added.
"I know that everyone was hanging on that one result last week to measure whether I was successful or not, but ... bigger things were driving me when I took this job. And from that perspective, I've accomplished what I wanted to do."
Gallop said there was plenty of time to find a replacement before the Socceroos played their next match in March, adding there were no guarantees that an Australian would get the job.
"It's important that we get the right person to fill the big shoes," Gallop said.
"One thing I do know is that the standards that Ange set in training, in sports science, in general preparation of the boys, will now always be there.
"That standard has now been set."
(Reporting by Nick Mulvenney, editing by Peter Rutherford)
