During his 6-year tenure, the 43-year-old – described by former captain Brendon McCullum as "the best coach the Blackcaps have ever had" – guided the team to new heights across all three formats.
Although he had a year left on his contract, Hesson said he no longer felt fully committed to the role and his resignation would take effect at the end of next month.
"I know what's required over the next 12 months, but if I'm honest, I don't feel I have the capacity to give the job what it deserves," he said.
Hesson said he had no job to go to and his motivation for standing down was based purely on a need to pause and refresh, and to spend more time with his family.
New Zealand Cricket chief executive David White said he had tried to persuade Hesson to stay on, but that he understood his reasons for walking away.
"Mike has overseen one of NZC's most successful periods of international cricket, he's more than realised the potential we saw in him back in 2012, and has grown into one of the most respected coaches on the international circuit," he said.
New Zealand captain Kane Williamson said Hesson would be remembered as a selfless coach who extracted the maximum potential from his teams.
Under Hesson's reign, New Zealand played 53 Tests for 21 wins and 13 draws and won 65 of 119 one-day internationals and 30 of 59 T20s.
During his tenure, New Zealand also made the final of the 2015 World Cup.