The Labor leader, 55, held a snap press conference to confirm his intention to step down as premier, treasurer and the member for Rockingham.
"This week will be my final week," he said on Monday.
"I've loved the challenge of solving problems, making decisions, getting outcomes and helping people.
"But the truth is, I'm tired - extremely tired.
"In fact, I'm exhausted."
The premier said the role of political leadership was relentless and the COVID-19 years had taken it out of him.
He said he had no immediate plans beyond taking a break.
"I'm convinced WA Labor can win, and will win, the next election in 2025," Mr McGowan said.
"But I just don't have the energy or drive that is required to continue in the role as premier or to fight that election, which would have been my eighth election as a member of parliament."
A former Navy lawyer, Mr McGowan shepherded WA through the pandemic, copping criticism for border closures which spanned almost two years.
The premier, who also fought a bruising defamation battle with billionaire Clive Palmer and picked fights with rival politicians over the state's GST revenue share and Australia's relationship with China, said he left with no regrets.
Prime Minister Anthony Albanese said he had spoken to Mr McGowan and congratulated him.
"He has been a great premier of his proud state, an extraordinary leader for WA Labor and a trusted friend," he said.
"Above all, Mark will be remembered for seeing the people of Western Australia safely through one of the most challenging crises in our nation's history."
The premier led Labor to crushing election victories in 2017 and 2021, the latter securing his party the biggest parliamentary majority in the state's history and reducing the opposition to a handful of seats.
Mr McGowan had previously insisted he would serve out the remainder of his second term as premier before considering his future.
He made the announcement flanked by his wife Sarah and members of his ministry.
Mr McGowan said he had been contemplating stepping down for quite a while but had wanted to first hand down the state budget.
Before clinching election victories, the premier spent five years as opposition leader.
He said it had been an honour and privilege to serve the WA community as premier and as an MP for almost three decades.
"It's way beyond what I could ever have imagined my career would amount to," he said.
Deputy Premier Roger Cook, Health Minister Amber-Jade Sanderson and Transport Minister Rita Saffioti are among the frontrunners to succeed Mr McGowan, who will finish up at the end of this week.
Mr Cook declared he would run just hours after Mr McGowan announced his retirement.
"As a born and bred Western Australian, I will always champion our State and all of the communities that make it the best place to live in Australia at every opportunity," he said in a statement.
Mr McGowan said criticism of the government's handling of youth detainees at the Banksia Hill detention centre had not influenced his decision.
"There's always things you think you could do better ... I try not to dwell," he said.
Mr McGowan said he hoped to be remembered as an achiever and for making the state stronger and better and had no regrets.
Opposition Leader Shane Love said Mr McGowan's resignation would be a significant loss for the government.
"The McGowan name has been very much the brand of this particular Labor government and that brand has been based on him," he said.
"The loss of that name will come as a cost to the Labor party ... and therefore an opportunity for the opposition."
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