Labour Party leader Phil Goff says the departure of Sue Bradford is a loss to the Green Party.
Ms Bradford will leave Parliament at the end of October after a decade as an MP.
She says her decision was prompted by her failed bid for the position of party co-leader in May, which was won by Metiria Turei.
Mr Goff says the Green Party will miss her experience and commitment.
He says Labour wishes Ms Bradford well in whatever she ends up doing, when she leaves Parliament.
The party's new MP will be Dave Clendon, an Auckland-based small business advisor and a former lecturer in resource management.
'One of the hardest days of my life'
Ms Bradford says the party's decision on the leadership was clear and democratic but nonetheless disappointing, and she is now ready for a change.
"It was one of the hardest days in my life," she told Checkpoint on Friday. "I certainly felt that it was a very clear choice the Green Party made to go with a different style of leadership (and) with a generational shift."
Ms Bradford says the past months have been "really tough" since the leadership decision and prompted her to think about her staying on until the next election or whether she would stand again.
"Once I started thinking about that, I realised it that may be better to make a clear decision long before then - that my heart wasn't in the job in the same way it was before the co-leadership result," she told Checkpoint.
"The party had made its choice, and I certainly didn't want to become one of the time-wasting, time-filling MPs who just sits here to get a salary. I never wanted to be like that."
Regrets at never becoming a minister
Ms Bradford says she regrets that she never got to be Minister of Social Development or Minister of Housing.
"That was my true ambition in coming here," she told a news conference at Parliament on Friday, "to really try and shake up and reform our welfare system and also to do a lot in the housing sector."
Ms Bradford says she will continue taking a deep interest in those areas. Her resignation will be effective on 30 October, though she will remain a member and supporter of the Green Party.