Ukip's only MP Douglas Carswell is leaving the party and will sit in the House of Commons as an independent.
Mr Carswell said he was leaving "amicably" and that there will be no need to call a by-election in his Clacton constituency as he will not be rejoining the Tories or switching allegiance to another party.
It comes after a public spat with Ukip's biggest financial backer Arron Banks, a close ally of former leader Nigel Farage, who suggested this month that he could trigger a by-election in Clacton using a recall petition and stand against Mr Carswell.
Announcing his resignation on his blog, Mr Carswell said Ukip has now achieved its goal of getting Britain out of the European Union, with Theresa May poised to trigger Article 50 to formally begin Brexit on Wednesday.
He said while Ukip has not won many seats in Parliament, "in a way, we are the most successful political party in Britain ever".
Mr Carswell paid tribute to party members and supporters, adding: "Like many of you, I switched to Ukip because I desperately wanted us to leave the EU.
"Now we can be certain that that is going to happen, I have decided that I will be leaving Ukip.
"I will not be switching parties, nor crossing the floor to the Conservatives, so do not need to call a by-election, as I did when switching from the Conservatives to Ukip.
"I will simply be the Member of Parliament for Clacton, sitting as an independent.
"I will leave UKIP amicably, cheerfully and in the knowledge that we won."
Responding to Mr Carswell's resignation, Mr Banks tweeted a smiley face emoji and a green tick.
Mr Carswell immediately faced calls from Mr Banks' camp to call a by-election so the donor can stand against him.
Andy Wigmore, a spokesman for Mr Banks, said: "The net has been closing in - there is a Ukip National Executive Committee meeting on Monday and he knew he was for the chop, so jumped.
"He should call a by-election and Arron will stand against him."
Earlier this month, Mr Farage urged colleagues to expel Mr Carswell, suggesting he never really left the Tories.
He said the MP had to go because "I don't want my successor to have to put up with the same sabotage and division that I did".
Mr Farage unleashed his attacks on Mr Carswell as the row heated up over claims that the MP played a role in blocking a knighthood for the former leader.
Leaked emails showed Mr Carswell joked that Mr Farage should be given an OBE "for services to headline writers".
The MP, who defected from the Conservatives in 2014, responded with a provocative late-night tweet saying "Knight night".
This prompted Mr Banks to declare he is ready to stand against Mr Carswell in the 2020 general election.
Mr Carswell was re-elected in Clacton at the 2015 General Election with a majority of 3,437, beating the Tories into second place.
But that victory was secured on a more slender majority than the 12,404 he achieved in the 2014 by-election, sparked by his defection to Ukip.
Following the row between Mr Farage and Mr Carswell, Mr Banks said he would be concentrating on a new political movement after claiming his membership of the party was suspended.
But Ukip dismissed the idea he could have been suspended, as he was no longer a member of the party.
Mr Banks suggested on Twitter that the move was "apparently for saying current leadership couldn't knock the skin off a rice pudding" and he has also compared the way the party is run to a squash club.
The businessman funded the Leave.EU campaign in last year's Brexit referendum and gave £1 million to Ukip ahead of the 2015 general election.