“It is time for a significant change,” Domenicali, 48, said in a Ferrari statement announcing his resignation.
The man who took over from FIA boss Jean Todt in 2008 stands aside with Ferrari having failed to climb the podium in the first three races of the season and languishing fifth in the constructors’ table.
Ferrari’s North American CEO Marco Mattiacci will assume control of the team, his remit simple – to reverse the scuderia’s fortunes in a year when Mercedes are leaving all in their wake.
Domenicali has faced growing pressure over the poor performances of drivers Fernando Alonso and Kimi Raikkonen.
“There are special moments that come along in everyone’s professional life when one needs courage to take difficult and very agonising decisions,” Domenicali said.
“It is time for a significant change. As the boss I take responsibility, as I always have done, for our current situation,” he added.
“This decision has been taken with the aim of doing something to shake things up,” he said.
Ferrari president Luca di Montezemolo thanked Domenicali “for his sense of responsibility up to today where he placed Ferrari’s interests before his own”.
Domenicali’s near seven-year reign featured a constructors title in his first year in charge but critically no drivers’ titles, with Felipe Massa going closest in 2008.
Alonso had to settle for second best to Red Bull’s Sebastian Vettel in 2010 and 2012.
New technical rules introduced for Formula One cars this season has left Ferrari uncharacteristically playing catch-up to the likes of Mercedes who have won all three races in 2014.
Nico Rosberg started the ball rolling in Australia and Malaysia with Lewis Hamilton taking the honours in Bahrain.
After the Bahrain race in which Alonso and Raikkonen trailed in 10th and 11th a frustrated Domenicali admitted: “I don’t like seeing our drivers fighting hard everywhere and then being unable to attack or defend on the straights.”
Mattiacci joins the team with Alonso placed fourth in the drivers’ title race with 26 points, 35 points behind leader Rosberg, and Raikkonen in 12th with a mere seven points.
The constructors’ standings make equally grim reading for fans of the scuderia with Ferrari only fifth on 33 points behind leaders Mercedes on 111.
Ferrari are the most successful team in F1 history, boasting a record 15 drivers’ championships and 16 constructors titles.
Raikkonen was the last Ferrari driver to be crowned world champion in his first spell with the team in 2007.
Mattiacci will be in place in time for the next race in China on Sunday.