Townsend has been juggling his chief executive role at the Sky Blues with a managing director role at the APL since earlier this year, but he will leave Sydney FC in the coming months once a handover to the incoming chief executive is complete.
A number of candidates have already started the interview process, with Sydney to make their final decision early next year.
Townsend joined Sydney in October 2017 and has played a key role in the club's most successful period.
Sydney have won 11 trophies across A-League Men, Women, Youth, and E-League competitions during that stretch, with the Sky Blues appearing in eight of the past 10 men's and women's grand finals.
"I am proud to have led Sydney FC to an exceptionally strong position, with an exciting future and two world-class facilities, Sky Park and the new Sydney Football Stadium, less than 12 months away," Townsend said.
"I have no doubt the club will continue to flourish both on and off the field.
"My role as APL CEO will enable me to put all of my efforts into ensuring Sydney FC and every A-League club reaches their full potential."
The Sky Blues have endured a tough start to the ALM season but they picked up their first win last week with a 2-1 victory over Wellington.
The A-League Women side is on top of the ladder with a perfect 3-0 record.
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