The 85-year-old became Pope Benedict XVI in April 2005 following the death of John Paul II.
Resignations from the papacy are not unknown, but this is the first in the modern era, which has been marked by pontiffs dying while in office.
Pope Benedict, who led an open air mass in Bellahouston Park on a visit to Glasgow in 2010, today said his "advanced age" means he is no longer able to carry out all his tasks adequately.
In a statement today, the Pontiff said: "After having repeatedly examined my conscience before God, I have come to the certainty that my strengths, due to an advanced age, are no longer suited to an adequate exercise of the Petrine ministry.
"I am well aware that this ministry, due to its essential spiritual nature, must be carried out not only with words and deeds, but no less with prayer and suffering.
"However, in today's world, subject to so many rapid changes and shaken by questions of deep relevance for the life of faith, in order to govern the barque of Saint Peter and proclaim the Gospel, both strength of mind and body are necessary, strength which in the last few months, has deteriorated in me to the extent that I have had to recognise my incapacity to adequately fulfil the ministry entrusted to me."
Leader of Glasgow City Council, Councillor Gordon Matheson said he was "shocked" to hear of Pope Benedict's decision to resign.
He added: "I will never forget Pope Benedict's joyful visit to Glasgow in 2010, which was a proud day not only for Glasgow's Catholics but for the entire city.
"Glasgow set the tone for what was a hugely successful state visit to Britain.
"On behalf of the city I wish His Holiness a serene and comfortable retirement."
At 78, the former Cardinal Joseph Ratzinger was one of the oldest new popes in history when elected. He took the helm as one of the fiercest storms the Catholic Church has faced in decades –the scandal of child sex abuse by priests – was breaking.
He will be the first head of the Catholic Church to resign in almost 600 years.
Vatican spokesman Federico Lombardi said: "The Pope announced that he will leave his ministry at 8pm, 7pm UK time, on February 28."
Today he said he wishes to continue to serve the church "through a life dedicated to prayer".
He added: "Dear Brothers, I thank you most sincerely for all the love and work with which you have supp-orted me in my ministry and I ask pardon for all my defects.
"With regard to myself, I wish to also devotedly serve the Holy Church of God in the future through a life dedicated to prayer."
The last pope to resign was Pope Gregory XII, who stepped down in 1415 in a deal to end the Great Western Schism among competing papal claimants.
There are several papal contenders in the wings, but no obvious front-runner as was the case when Pope Benedict was elected.