Adam Wilkinson, chief executive of Derby City Council, has taken voluntary redundancy.
He will receive three months' pay and a compensation payment of £100,000.
His departure is said to come as part of the budget consultation for 2015/16, in which the council has proposed a review of its senior management structures.
In a statement released by the authority, it states that "Mr Wilkinson feels it is the right time to look for a new challenge, perhaps in a different sector".
The leader of the council, Ranjit Banwait, said: "Adam has served the council and the city for over five years, and leaves a positive legacy of regeneration across the city.
"He has recognised that his departure at this stage will enable the council to undertake a more fundamental review of its options for the future shape of its senior management structure that will be required to meet the challenges that lie ahead."
Conservative group leader Philip Hickson said, on behalf of his group, he was "extremely saddened and concerned Adam is leaving".
He said: "From my point of view, Adam is a very talented, capable, and motivated chief executive who has transformed this council from where it was to where it is now.
"Adam raised the profile of the city and to a considerable degree was instrumental in most of the positive things that have happened at the council in the past five years."
Mr Wilkinson was involved in a number of major projects during his time at the authority.
These include Streetpride, managing the council's transformation programme and refurbishment of the Council House, the Multi Sports Arena and Velodrome project and, more recently, the Infinity Park Derby project which will create up to 8,000 jobs over the coming years.
The council said in its statement: "In respect of the terms agreed for Mr Wilkinson's exit, the council's external auditors have been informed and are content, as are we, that the value for money test is being met.
"These payments are well within the affordability test that the council applies when considering all voluntary redundancy applications. We wish him well in his new endeavours."
