Mr Joyce advised the board he was bringing forward his retirement by two months"to help the company accelerate its renewal", Qantas announced on Tuesday.
CEO designate Vanessa Hudson will assume the role of managing director and group CEO on Wednesday.
"In the last few weeks, the focus on Qantas and events of the past make it clear to me that the company needs to move ahead with its renewal as a priority," Mr Joyce said.
"The best thing I can do under these circumstances is to bring forward my retirement and hand over to Vanessa and the new management team now, knowing they will do an excellent job."
Mr Joyce said he was proud of his 15 years at the helm of the national carrier.
"There have been many ups and downs, and there is clearly much work still to be done, especially to make sure we always deliver for our customers," he said.
"But I leave knowing that the company is fundamentally strong and has a bright future."
Mr Joyce's decision comes after a horror week for Qantas, which has been marked by a Senate grilling on delays and warnings the airline faces a potential $250 million fine.
The Australian Competition and Consumer Commission announced it was taking court action after Qantas allegedly advertised tickets for flights that had already been cancelled.
A spokesperson has previously said the company would review allegations made by the consumer watchdog but acknowledged its standards "fell well short" as the airline emerged from the COVID-19 pandemic.
"The ACCC's allegations come at a time when Qantas' reputation has already been hit hard on several fronts," the spokesperson said.
"We know it will take time to repair and we are absolutely determined to do that."
Last month Qantas announced a record pre-tax profit of $2.47 billion for the past financial year, after recording a loss of almost $2 billion the year before.
Soon after, it came under pressure to pay back the money it received from the federal government at the height of the pandemic. It received $2.7 billion from taxpayers, including $900 million from the JobKeeper program.
Qantas Chairman Richard Goyder said the board thanked Mr Joyce for his leadership.
"Alan has always had the best interests of Qantas front and centre, and today shows that," he said.
Shareholders will formally vote on the appointment of Ms Hudson as Managing Director at the company's annual general meeting in November.
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