"Following the decision of the National Executive Committee of the African National Congress to recall President Thabo Mbeki, the President has obliged and will step down after all constitutional requirements have been met," the presidency said in a terse statement.
Mbeki was due to stand down next year after two terms in office, but faced growing pressure from Zuma's supporters to quit following a judge's ruling that Mbeki may have had a role in Zuma being charged with corruption.
On Saturday, African National Congress secretary-general Gwede Mantashe said the party's high-level committee "decided to recall the president of the republic before his term of office expires."
Mbeki will remain in the top office until an interim president is appointed and will continue as mediator in Zimbabwe, where last week he persuaded President Robert Mugabe to cede some power to the opposition for the first time in 28 years.
Mbeki, who succeeded Nelson Mandela in 1999, has been heralded by the international business community. If other key cabinet ministers decide to quit in solidarity, there could be turmoil.
Several key government executives, including Deputy President Phumzile Mlambo-Ngcuka, already have indicated they will do so.
All eyes are on Finance Minister Trevor Manuel, who shares the credit with Mbeki for South Africa's sustained economic growth and investor-friendly policies over the past 10 years.
Mantashe said Zuma was meeting with Cabinet ministers to persuade them to remain in government. He said there was no decision on whether to hold early elections and that parliament would meet in the near future to formalize Mbeki's resignation.
He said top priority at the moment was to focus on "ensuring the smooth running of the country."
"We share the desire for stability and for a peaceful and prosperous South Africa," he told a news conference.
Mbeki fired Zuma as his national deputy president in 2005, after Zuma's financial adviser was convicted of trying to elicit a bribe to deflect investigations into a multibillion-dollar international arms deal.
The charges were withdrawn against Zuma, but the chief prosecutor announced in December he had enough evidence to bring new ones. This was within days of Zuma ousting Mbeki as ANC president.
In a ruling last Friday that threw out corruption charges against Zuma, Judge Christopher Nicholson said it appeared Mbeki and his justice minister had colluded with prosecutors against Zuma as part of the "titanic power struggle" within the ANC.
Mbeki indignantly denied this Friday.
"It impoverishes our society that some resort to the tactic of advancing allegations with no fact to support these," the presidency said in a statement. "The question will have to be answered now - what kind of society are we building, informed by what value system and with what long-term effect to the political and overall moral health of the nation?"
Despite his nine years at the top, Mbeki never managed to win the hearts of the masses because of his aloof, academic manner, lacking Zuma's relaxed spontaneity.
Mbeki's economic policies won him accolades from big business and foreign investors but failed to lift millions of marginalized South Africans out of poverty or to ease the country's crushing unemployment.
His government did much to improve housing and health care but his refusal to accept the causes and scale of the AIDS crisis reversed many of the social advances and caused despair among the global scientific community.
Mbeki devoted considerable time and energy to promoting what he called the African renaissance and believed that the continent should solve its own problems without interference from the West.
He was one of Africa's top troubleshooters, mediating in conflicts ranging from the Ivory Coast, to Congo to Sudan and critics often accused him of spending more time abroad than at home.