"I have this morning taken the difficult decision to begin the process of stepping down as leader of the Welsh Labour Party and, as a result, first minister," Vaughan Gething said.
The announcement on Tuesday came after four members of Gething's semi-autonomous government quit, demanding he resign.
Gething, the son of a Welsh father and a Zambian mother, made history in March when he was elected to head the Cardiff-based administration, becoming the first Black leader of a government in the UK.
He has faced criticism for accepting Stg200,000 ($A380,000) in donations during his leadership campaign from a recycling company whose owner had been found guilty of environmental offenses and breaching health and safety regulations.
His leadership has crumbled since the Welsh nationalist party Plaid Cymru ended a co-operation arrangement with Gething's minority Labour government in April.
Yhe following month Gething lost a non-binding no-confidence vote in Wales' parliament, the Senedd.
In a resignation statement, Gething said he had "hoped that over the summer a period of reflection, rebuilding and renewal could take place under my leadership.
"I recognise that this is not possible," he said.
Wales, which has a population of about three million, is one of four parts of the United Kingdom, along with England, Scotland and Northern Ireland.
The British government in London is responsible for defense, foreign affairs and other UK-wide issues, while administrations in Cardiff, Edinburgh and Belfast control areas such as education and health.
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