Support for the center-left Labour Party has plummeted below 25 percent. Little was facing a vote of no confidence just weeks ahead of the general elections.
New Zealand's opposition leader Andrew Little resigned just two months before the country's nationwide election.
Little resigned as Labour leader and endorsed his widely popular deputy Jacinda Ardern as replacement ahead of a party meeting where he was facing a vote of no confidence.
The center-left party has been polling terribly in recent weeks, with support at a 20-year-low. Three separate opinion polls placed support at less than 25 percent.
"Recent poll results have been disappointing. As leader, I must take responsibility for these results," he said.
"I do take responsibility and believe that Labour must have an opportunity to perform better under new leadership through to the election."
After the announcement Ardern was elected unopposed as the party's new leader. Kelvin Davis was elected unopposed as deputy leader.
National Party's English ahead in the polls
Prime Minister Bill English, of the center-right National Party is seeking reelection and enjoys a comfortable lead in the polls.
English took over the leadership in 2016 after John Key resigned in a shock move.
New Zealanders will vote in a general election on September 23.
English told journalists he would respect any leader of the opposition but that they would face a lot of difficulty.
"They are in disarray. I think the basic problem is not really the leadership, it's that they don't have a positive view of what New Zealand can achieve. But we've got a lot of hard work to do.
"These are the consequences of making poor political judgments and not having policy."
aw/jm (Reuters, AP)