Johnson, who won five titles as a player with the team, was appointed president in March 2017.
After building high hopes with the acquisition of LeBron James last summer, the team finished the season with a 37-45 record, following a loss to the Portland Trail Blazers hours after Johnson's announcement. That makes it six years without making the playoffs, continuing the longest streak in team history.
Still, Johnson said he thinks the team has excellent potential and just needs one big free agent acquisition to make a deep playoff run.
"They'll get another one," Johnson said. "The team is in place. Everything is in place. We add one guy and this team is in the Western Conference finals. We're not too far away from everybody."
"Before we got hurt, we were in fourth, two games away from being in first, playing some good basketball. And I think we can continue to do that."
Johnson, 59, made the announcement in an impromptu press conference before the Lakers played the Trail Blazers at Staples Center. He said he had not yet formally notified team president Jeanie Buss of his decision.
About two hours after he spoke, Buss tweeted a statement: "Earvin, I loved working side by side with you. You've brought us a long way. We will continue the journey. We love you."
Earvin, I loved working side by side with you. You’ve brought us a long way. We will continue the journey. We love you 💜💛 https://t.co/ofmQl6BtBz— Jeanie Buss (@JeanieBuss) April 10, 2019
Johnson said he thought to himself, "What am I doing? I've got a beautiful life, so I'm going to go back to that beautiful life. I'm looking forward to it."
"Somebody's going to have to tell my boss. I know she's going to be sick but I know I couldn't face her face-to-face, even though I was just with her yesterday. We had like a three-hour meeting about the direction (of the team).''
The Lakers released a statement about Johnson:
"There is no greater Los Angeles Laker than Earvin Johnson. We are deeply grateful to Magic for all that he has done for our franchise - as a player, an ambassador and an executive.
We thank him for his work these past two years as our President of Basketball Operations and wish him, Cookie, Andre, EJ and Elisa all the best with their next steps. He will always be not only a Lakers icon, but our family.
As we begin the process of moving forward, we will work in a measured and methodical fashion to make the right moves for the future of our organization."
Laker fans who poured into the Staples Center for the final game of the season expressed disbelief after hearing about the news. Many were disappointed and confused, saying success comes with patience and that one year isn't enough to turn a team around.
Lakers coach Luke Walton spoke at a postgame press conference, but declined to address Johnson's announcement, saying instead he wanted to focus on the team's players and the season.
"We're not going to talk about Magic's message from earlier," Walton said. "I found out the same time you guys did. We've been here to play and compete for a game."