Ms Davies said on Friday she would also step down as the leader of the WA Nationals but would continue as the MLA for the seat of Central Wheatbelt until the 2025 election.
"I spent the summer thinking about my own parliamentary career and what's ahead, not only for the next two years but what it would take to contest the March 2025 state election," she told reporters.
"I don't have any fuel left in the tank to go beyond that election."
Ms Davies said she had never wanted to be a career politician and 17 years in parliament would be long enough.
"It has been an enormous privilege to lead the National Party," she said fighting back tears.
"But I think when you do this role you have to have the energy and the passion to get up and do it with everything you've got and I know it's my time."
She said she wanted to pursue another career but did not yet know what that would be.
Leader of the federal National Party David Littleproud said Ms Davies had left a strong legacy and was a role model.
"Ms Davies broke glass ceilings and rose through the political ranks due to her hard work ethic, strong morals and tenacious attitude," he said.
"I have a huge amount of respect for Ms Davies – she was a strong leader and never wavered from her beliefs."
Ms Davies was the first member of the WA Nationals to hold the role of Opposition leader in that state since Arthur Watts in 1947.
She became a member of the state Legislative Assembly for Central Wheatbelt in 2013 and quickly went on to become Minister for Water and Forestry, Sport and Recreation.
Ms Davies also served in the Legislative Council from 2009 to 2013 and was the youngest member at the time.
Her resignation from the roles would be effective as of the next meeting of the parliamentary National Party, which is likely to be scheduled for Monday.
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