The decision was made during a closed Board of Governors meeting Tuesday morning.
Her resignation is now effective Jan. 31.
"I think our focus is on the institution," UNC Board of Governors Chair Harry Smith said Tuesday. "Where we're at today, I think the Board of Governors has worked very tirelessly to do this right, in conjunction with UNC Chapel Hill. I think the Chancellor took a very bold action there. From that perspective, we take a look at what we think is the very best for the institution. We feel strongly that it's probably in the best interest to go ahead and allow a change in leadership so we can move to a healing process."
Folt said Tuesday she was "disappointed" about her accelerated departure.
"While I'm disappointed by the Board of Governors' timeline, I have truly loved my almost six years at Carolina. Working with our students, faculty and staff has inspired me every day. It is their passion and dedication, and the generosity of our alumni and community, that drive this great University. I believe that Carolina's next chancellor will be extremely fortunate, and I will always be proud to be a Tar Heel."
"The Board authorized UNC System Interim President Roper to appoint an interim chancellor at such time as he deems appropriate," a statement from The University of North Carolina System said.
"Our focus is and always will be what's in the best interest of the institution and we felt strongly it was time to go ahead and make a change and allow the institution to move forward and so that's why we compressed the timeline," Smith said.
RELATED: UNC chancellor says path in place for Silent Sam to be moved
Folt dropped the news Monday at an emergency meeting of the Board of Governors.
"I am writing today to let you know that I have decided to step down as chancellor following graduation, at the end of the academic year," Folt wrote Monday.
In her letter, she also announced plans to move Silent Sam off of UNC's Chapel Hill campus.
in annoucnement @ChancellorFolt announces she is stepping down at the end of this academic year. "I'm deeply proud of what you've accomplished and what we've accomplished together since I became a Tar Heel nearly six years ago in 2013." #ABC11 @UNC #BREAKING pic.twitter.com/FlZwqD9cQr— Josh Chapin (@JoshChapinABC11) January 14, 2019
When news spread of Folt's surprise announcement on Silent Sam, a group of UNC students called an impromptu news conference at the base of the contentious monument.
They chanted, "Tar Heels tore the statue down. Anti-racists run this town," as they one-by-one celebrated Folt's decision as a victory and warned that their fight is not over.
"This is a good day for the anti-racists activists of this town," said Kristen Laverly, a UNC senior. "All of these people out here have put their mental, emotional, and physical health on the line to be able to achieve what's happened here."
UNC law student Gina Balamucki acknowledged Folt's superiors at the UNC System could work to override her decision.
"The Board of Governors or Board of Trustees can reinstate a chancellor tomorrow who puts this right back up," Balamucki said. "We know that this isn't the end."
Gov. Roy Cooper issued a statement early Tuesday in support of the decision on the remnants of the Confederate statue.
"I appreciate the Chancellor's actions to keep students and the public safe," Cooper said. "North Carolina is welcoming to all, and our public university should reflect that."
Folt tweeted out her full statement soon after the news broke.
Deeper in her statement, Folt revealed that she has authorized the removal of the base and commemorative plaques from the Confederate Monument site in McCorkle Place.
"As chancellor, the safety of the UNC-Chapel Hill community is my clear, unequivocal and non-negotiable responsibility," Folt wrote. "The presence of the remaining parts of the monument on campus poses a continuing threat both to the personal safety and well-being of our community and to our ability to provide a stable, productive educational environment. No one learns at their best when they feel unsafe
"The independent panel of safety experts we convened in November to help us review options for the monument that we presented to the UNC Board of Governors made a strong and compelling case for risks to public safety. The fact that despite our best efforts even since then, threats have continued to grow and place our community at serious risk has led me to authorize this action."
The UNC Board of Trustees issued a statement of support for Folt's decision regarding the site of the controversial Confederate monument.
"We support her decision to remove intact the base of the Confederate Monument and accept her decision to step down from her position. We thank Chancellor Folt for working tirelessly to elevate our University each and every day to serve the people of North Carolina and beyond. The chancellor has ultimate authority over campus public safety, and we agree Chancellor Folt is acting properly to preserve campus security. Nothing is more important than keeping our campus community and visitors as safe as possible."
The UNC Board of Governors held an emergency meeting Monday afternoon. Afterward, the board was clearly not pleased with the way Folt's announcement transpired.
UNC Board of Governors Chairman Harry Smith also issued a statement following the board meeting and Folt's decision.
"The Board of Governors was not privy to the Chancellor's announcement prior to her statement being made public. We are incredibly disappointed at this intentional action. It lacks transparency and it undermines and insults the Board's goal to operate with class and dignity. We strive to ensure that the appropriate stakeholders are always involved and that we are always working in a healthy and professional manner. In December, the Board developed and articulated a clear process and timeline for determining the best course of action for the future of the Monument-and this remains unchanged. Moving forward, the Board will continue to work tirelessly and collaboratively with all relevant parties to determine the best way forward for UNC-Chapel Hill. We will do so with proper governance and oversight in a way that respects all constituencies and diverse views on this issue. The safety and security of the campus community and general public who visit the institution remains paramount."
Folt became chancellor of the university in 2013, the 11th in the history of the nation's oldest public university.
A search for a new chancellor begins immediately, Smith said.