Commissioner Alex Hughes, along with his wife Commissioner Ingeborg Hughes, will make the unprecedented step-down in June, three years before their retirement is due.
Hughes will be replaced as territorial commander by Shaw Clifton, currently territorial commander of the New Zealand, Fiji and Tonga region.
Commissioner Hughes held the most senior post in Central and then South America before taking the top job in the UK and Ireland nearly five years ago.
"It's the equivalent of the Archbishop of Canterbury stepping down to head up a local church," said a spokeswoman.
Hughes, who will retain his rank, insisted the move was not a step-down, but simply a new direction in which God was taking him.
During his tenure, Hughes oversaw some major policy changes at the Salvation Army, not all of which were popular within the organisation. Around 18 months ago, the fundraising function was moved out of the regions and centralised in head office, and last May, several public relations directors were made redundant in a sweeping restructure of the communications department.
One former employee told Third Sector that many of the changes were opposed by "members, donors and workers alike", and carefully hidden from the media.
He said the new strategies served to give the organisation a modern, shiny image but neglected the foundations on which it was built. "For example, they spent a fortune producing a glossy booklet about their personnel policies, yet I know of one director who had been there for many years and didn't even get a letter of thanks when he retired. They are falling down on the basics."
But Hughes defended the changes he introduced, saying they gave staff "freedom of expression" and allowed them to be accountable for themselves.