The decision is likely to give US President Donald Trump decisive influence over the next leadership of the institution although Washington's control over the 189-member global development lender has faced mounting criticism.
Kim, who became the bank's president in 2012, is set to join an as-yet unnamed firm focusing on investments in developing countries, the bank said in a statement, and will return to the board of Partners In Health, a non-profit group he co-founded.
The US is the largest shareholder in the development lender, which was conceived during the Second World War to finance the reconstruction of Europe but has since focused on alleviating extreme poverty around the world.
Kim's unexpected departure almost three years before his term was set to expire is likely to set off a fierce battle between the Donald Trump administration and other countries which have complained about the influence the United States exerts over the World Bank.
Kristalina Georgieva, the chief executive of the World Bank, will take over as interim president when he departs.
Mr Kim - who was born in Seoul, South Korea - trained as medical doctor before rising through the ranks at the Bank.
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At stake is a vast country rich in the minerals that power the world's mobile phones and laptops, yet desperately underdeveloped. A CENI spokesman later said the commission was holding a meeting on Sunday to decide when they will be announced.
Kim also pushed the Bank's cooperation with the private sector for financing development in the developing world, particularly in the areas of climate change and infrastructure.
The World Bank committed almost $US64 billion in loans to developing countries in the fiscal year ended June 30 last year. The board said Monday it will immediately begin the process for picking Kim's successor. The Trump administration would be expected to nominate its preferred candidate to succeed Kim.
Already the USA nominee was challenged for the first time in 2012 by two contenders.
The Trump administration has put pressure on the World Bank to justify its lending practices, including loans to China.
Those same developing countries have become "increasingly opposed to United States dominance over the global development bank", the report added.
A spokeswoman for the US Treasury, which oversees the US voting interest in the World Bank, said that Treasury Secretary Steven Mnuchin "looks forward to working with his fellow governors in selecting a new leader".