He announced his resignation from his New York City office just after 11:30 a.m. He will be replaced by Lt. Gov. David Paterson, who will become New York's first black governor.
"I cannot allow for my private failings to disrupt the people's work," he said, with his wife at his side.
The scandal hit Monday, with the first word of allegations that Spitzer, a 48-year-old married man with three teenage daughters, spent thousands of dollars on a call girl the night before Valentine's Day.
"I have acted in a way that violates my obligations to my family and violates my, or any, sense of right and wrong," the governor said at a news conference with his wife, Silda, at his side. "I apologize to the public, whom I promised better."
Immediately, the calls came for him to step down and Republicans threatened to start impeachment proceedings if he didn't do it by tonight.
Spitzer, meantime, has been holed up in his Manhattan apartment. Reports suggest he was weighing his options and might try to use his resignation as a bargaining chip with federal prosecutors to try to stay out of jail.
Eyewitness News is told that Spitzer's own bankers got the investigation started, when they reported large, frequent cash transfers from several accounts. They told the Internal Revenue Service, and the accounts were traced back to Spitzer, leading public corruption investigators to open an inquiry.
A law enforcement official told the Associated Press Spitzer spent tens of thousands of dollars with the call-girl service Emperors Club VIP. Another official said the amount could be as high as $80,000.
According to an affidavit, a federal judge approved wiretaps on the escort service's telephone in January and February. FBI agents in Washington had the Mayflower under surveillance when Spitzer was in town, a senior law enforcement official said.
Spitzer, a first-term Democrat, built his political reputation as a crusader against shady practices. He rooted out government corruption, cracked down on big compensation packages for business leaders and made many high profile prostitution busts.
A graduate of Princeton University and Harvard Law, he was sometimes mentioned as a potential candidate for president.
Spitzer didn't just win the governor's office: He took it with an historic margin of victory on Jan. 1, 2007, and went into office vowing to stamp out corruption in New York government in the same way that he took on Wall Street executives as state attorney general.
But his time in Albany has been fraught with problems, including an unpopular plan to grant driver's licenses to illegal immigrants and a plot by his aides to smear his main Republican nemesis.