Thomas Jackson’s resignation follows the departure of several Ferguson officials after a federal report alleged widespread racial bias.
US Attorney General Eric Holder said the Department of Justice would reform the force, possibly dismantling it.
Ferguson, Missouri, came under investigation after a white police officer killed unarmed black teenager Michael Brown in August 2014.
Thomas Jackson had resisted calls from protesters and some state leaders to step down, after the shooting of Michael Brown last summer and the weeks of demonstrations that followed.
The city said it would be giving Thomas Jackson a severance payment and would pay for his health insurance for one year.
The resignation is effective on March 19 at which time an acting chief will assume the role.
The St Louis Post-Dispatch newspaper has posted what it said was Thomas Jackson’s resignation letter.
“It has been an honor and a privilege to serve this great city and to serve with all of you,” the letter reads.
The city said that it will conduct a “nationwide search” for a permanent replacement.
Last week, the DoJ released a report that accused the city of using the police force and court system to generate profit.
Since the report was released, Ferguson manager, a judge, two police officers, and a court clerk have either resigned or been fired.
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