George Black, chief executive of Glasgow City Council, told staff in a memo yesterday he is retire at the end of the year.
The 61-year-old leaves his post five years after he suffered a heart attack that many colleagues at the time believed would have led to his departure.
Mr Black, who is paid £168,000 a year, will act as the returning officer for the poll on Scotland's future on September 18, a duty for which he will receive a significant payment.
The city council said the date of Mr Black's departure and the process for choosing a successor will be announced later.
However, the move could see the city being run by its first female chief executive, with a number of existing senior council staff in the frame.
Sources also claim the council's political leadership may opt for a surprise appointment and not necessarily a prominent local government official.
But any successor is likely to face unprecedented challenges, with major spending cuts unlike anything experienced since devolution predicted for the public sector by next year.
A council source said: "Look at what we do. We delivers services to a population of about 600,000 people, have an annual budget of £2.3billion and employ about 30,000 people, with associated organisations.
"It is someone with experience at that level you are looking at.
"Secondly, given Scottish local government pays considerably less than south of the Border you are looking at someone from the pool up here, in all likelihood."
A panel of the authority's leading politicians are expected to be on the interview panel, although no criteria has as yet been set out.
Mr Black joined Glasgow District Council from Central Regional Council in 1990 as an assistant chief accountant. He became director of finance in 1999 and chief executive in 2003.
He was awarded a CBE for services to local government in the 2010 Queen's Birthday Honours List.
Staff were told of Mr Black's decision on Wednesday afternoon.
Mr Black said: "It has been a real honour to serve the people of Glasgow as chief executive for 11 years.
"In that time the city has been transformed, with new infrastructure, more jobs, and record exam results.
"None of that would have happened without the vision and hard work of elected members and council staff and it has been a real privilege to be part of the team at this exciting time. "However, there is still a lot to do and now is the right time to look for a new chief executive to manage the challenges and opportunities that lie ahead."
Councillor Gordon Matheson, the leader of the council, said: "George will certainly be a hard act to follow.
"We will have an open and competitive selection process to ensure we get the best person to serve the people of Glasgow in the coming years."
Opposition leader Susan Aitken also wished Mr Black well but added: "Change at the top of any organisation is always a good time to look at things afresh.
"It is certainly the case that the process of appointing a new chief executive should also provide an excellent opportunity to discuss how Glasgow City Council's governance procedures could be improved and revitalised so they better serve and connect with citizens."
Who's in the running for the job?
The finance director in charge of a £2.3bn budget, Mrs Brown succeeded George Black back in 2003 and is the probably the front runner to succeed him again. The mother-of-two, who is in her early 50s, has a reputation as a straight-talker and straight-batter, well liked and respected by other officers and politicians.
The current director of corporate affairs, Mrs O'Donnell is a lawyer by trade and has spent much of her working life within the council. A mother-of-two teenage children in her late 40s her job is effectively running areas of the council which do not provide front line services. Perhaps second favourite for the post.
Presently the chief executive of North Ayrshire, Ms Murray left Glasgow around five years ago where she was the head of service reform. She recently completed a stint as chair of the Society of Local Authority Chief Executives and many see her time in Ayrshire as a stepping stone to Glasgow.
An outside bet, the current boss of the Glasgow Chamber of Commerce and former Scottish Enterprise chief would be a real left field appointment. A well-liked and charismatic business figure with licensed trade interests, some feel its the wrong to experiment given the pressures ahead.