"The country needs fresh blood for the 2003 general elections," said Juhan Parts, 35, who had served as auditor since 1998. His five-year term was due to expire next year.
"I have met many politicians and people concerned about our country's future," he said. "I do not have personal ambitions in politics, I am concerned about the state in general."
Parts has earned a reputation as a tough auditor who keeps a tight reign on budgets at ministries and other state agencies.
He reorganized the audit office since taking the helm four years ago and has lived through three government changes.
His resignation still has to be accepted by Parliament, which reconvenes Aug. 26.
State audit official Juri Korge is serving in a caretaker role until the president nominates a new candidate.
Some politicians said Parts' announcement casts doubt on his recent performance as auditor, a non-partisan job.
"Rumors about his joining a party for several months, thus his work could have been politically biased," said Center Party MP Evelyn Sepp.
Parts said he joined liberal Res Publica, formed in December, because it was new and reliable and added that he wanted to run for chairman.
The party has advertised itself as a moderate force and has tried to appealed to ethnic Russians, who make up nearly 30 percent of Estonia's 1.4 million, as well as to Estonians.
"I have discussed with Parts the future of Estonia several times and our ideas match," said Tonis Palts, a former mayor of Tallinn and Res Publica member.
Parliament must still accept Parts' resignation.
Former President Lennart Meri, who appointed Parts auditor in 1998, wished him well in a statement.
"A political party is not a lottery opening the door to power. A party is meant to serve its people so they may comprehend their future clearly," Meri said. "So I wish Juhan Parts good luck in his work."