The University of North Carolina at Chapel Hill made the announcement around noon.
According to a press release from the school, Thorp notified UNC President Tom Ross on Sunday of his intent to resign, effective June 30, 2013.
"I will always do what is best for this university," Thorp said. "This wasn't an easy decision personally. But when I thought about the university and how important it's been to me, to North Carolinians and to hundreds of thousands of alumni, my answer became clear."
Thorp took the reins of Carolina in 2008, but it didn't take long before he became embroiled in controversy.
It was during his tenure where the university's football scandal unfolded and resulted in the firing of head coach Butch Davis and the retirement of UNC Athletic Director Dick Baddour.
The football scandal involving agents also turned into an academic investigation over classes.
The straw that broke the camel's back may very well have been the new travel scandal that involves the university's chief fund raiser and Tami Hansbrough -- the mother of former UNC basketball standout Tyler Hansbrough.
"Over the last two years, we have identified a number of areas that need improvement," Thorp said. "We have a good start on reforms that are important for the future of this university. I have pledged that we will be a better university, and I am 100 percent confident in that. We still have work to do, and I intend to be fully engaged in that until the day I walk out of this office."
Thorp also told Ross that he is willing to stay beyond June 30, if needed, to avoid any gap in leadership until a successor can be in place.
According to Monday's release, Ross said by Thorp announcing his intentions now, he can devote his full attention and focus over the next nine months to making sure that the problems identified on the campus have been fully corrected and that the many new policies, procedures and safeguards that have been implemented to prevent similar issues in the future are adequate and represent best practices.
Just this past Friday, UNC's Board of Governor's gave Thorp a vote of confidence.
Following Monday's announcement, UNC System President Emeritus Bill Friday released a statement.
"Public service in our state, when well done, is a noble and distinguished service," he said. "Chancellor Thorp rendered this kind of service to us all and he gave us his very best. All of us owe him and his family our deepest gratitude."
Thorp's decision also sent shockwaves across the campus and Chapel Hill.
"I am disappointed to hear of Chancellor Thorp's resignation," said Aaron Nelson, the President and CEO of the Chapel Hill-Carrboro Chamber of Commerce. "The partnership between the citizens, our business community and the university were greatly strengthened under his leadership."
"I would join the chorus of folks who would ask him to reconsider this decision and perhaps he will," said Chapel Hill Mayor Mark Kleinschmidt.
If Thorp does resign as planned, he would return to classroom at UNC as chemistry professor and researcher. His salary would be $425,000.