He did not give a reason for standing down but his tenure was marked by a struggle to avoid a schism over the consecration of women bishops in Britain, and of openly gay bishops in the United States.
"It has been an immense privilege to serve as Archbishop of Canterbury over the past decade, and moving on has not been an easy decision," Williams said in a statement released by his office Lambeth Palace.
Anglicans could now get their first black leader, with Ugandan-born John Sentamu, the Archbishop of York, widely viewed as front-runner to replace Williams.
Williams was appointed in 2002 as the 104th holder of the post, replacing George Carey as the head of the Church of England and the spiritual leader of the Anglican communion, which says it has 85 million members worldwide.
He conducted the wedding of Prince William and Kate Middleton at London's Westminster Abbey in April last year.
Williams' successor will be formally appointed by Queen Elizabeth II, who is the supreme governor of the Church of England.
The actual decision will rest in the hands of a commission grouping senior churchmen and lay people, who will then forward their nomination to British Prime Minister David Cameron.
But whoever replaces Williams will have the thorny task of healing the growing rift between the liberal wing of the Church of England and conservatives in the wider Anglican communion.
In 2010 five Church of England bishops said they would convert to Catholicism under an offer from Pope Benedict XVI to welcome Anglicans disaffected by moves to ordinate women.
Moves to ordain gay bishops have meanwhile alienated the Anglican church in Africa.
Williams said on Friday that the disagreements had been a "major nuisance" but insisted they had not clouded his tenure as archbishop.
"The worst aspects of the job, I think, have been the sense that there are some conflicts that won't go away, however long you struggle with them, and that not everybody in the Anglican Communion or even in the Church of England is eager to avoid schism or separation," he said.
He added that his resignation comes ahead of a number of "watersheds", including a vote by the Church of England this year on whether to give final approval to women bishops.
Sentamu, 62, said he had heard the news of Williams's resignation with "great sadness".
"The last decade has been a challenging time for the Church of England and the Anglican Communion. Thankfully, Archbishop Rowan is a remarkable and gifted leader who has strengthened the bonds of affection," he said.
Appointing Sentamu would have a whiff of controversy, however, as he last month agreed to write a weekly column for Rupert Murdoch's new Sunday edition of The Sun, Britain's top-selling tabloid.
Murdoch launched the paper to replace the News of the World, which he closed in July last year after a scandal over phone-hacking.
Cameron described Williams as "a man of great learning and humility" who had "guided the Church through times of challenge and change."
Williams was born in the Welsh city of Swansea in 1950, the son of a mining engineer, but his prowess rapidly took him into academia, first at Cambridge and then Oxford, where he became the youngest professor at the time at 36.
He was known in his youth for his left-leaning politics and as archbishop he was never afraid to voice controversial views on subjects ranging from the 2003 Iraq war, which he opposed, to sharia law.
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