A controversy over bias within the party leadership favouring Hillary Clinton on Sunday rocked the Democratic Party on the eve of its national convention in Philadelphia.
The head of the party announced her resignation after the publication of emails that indicated party leaders had preferred Clinton over rival Bernie Sanders during the primaries.
The emails, which were part of a hack into the Democratic National Committee (DNC) last year, appeared to confirm the bias that Sanders, a US senator from Vermont, had long accused the party leadership of holding.
The situation raised the possibility that Wasserman Schultz could be booed when she opens the convention on Monday just as the party is trying to unify behind Clinton.
Wasserman Schultz said in a statement that she remained committed to helping Clinton win the White House, but "going forward, the best way for me to accomplish those goals is to step down as party chair at the end of this convention."
She said she would fulfill her role and open and close the convention and address delegates "about the stakes involved in this election not only for Democrats, but for all Americans."
During the primaries she had denied the DNC favoured one candidate over another.
Clinton thanked Wasserman Schultz for her leadership of the DNC over the past five years.
"I know that this week's events will be a success thanks to her hard work and leadership," Clinton said in a statement.
US President Barack Obama also praised Wasserman Schultz, saying that during her tenure she "has had my back." He said her leadership "has meant that we had someone who brought Democrats together not just for my re-election campaign, but for accomplishing the shared goals we have had for our country."
Obama also said he had called her earlier Sunday.
Clinton's Republican opponent, Donald Trump, wasted no time in commenting on the situation on Twitter. He referred to a "rigged system" that pushed Clinton over the top.
"The highly neurotic Debbie Wasserman Schultz is angry that, after stealing and cheating her way to a Crooked Hillary victory, she's out!" Trump crowed.
Sanders stayed in the race through the final primary after putting up a surprisingly strong challenge to the former US secretary of state. The hacked emails were published by the whistleblowing website WikiLeaks.
In one of the emails a high-ranking member of the party leadership suggests Sanders' religious beliefs should be used against him in states with high numbers of Christian voters. Sanders was raised in a Jewish family and during the campaign described himself as "not particularly religious."
Sanders, who earlier Sunday called for Wasserman Schultz's resignation, last month announced the suspension of his campaign and said he supported Clinton. He is scheduled to speak on Monday evening.
Sanders issued a statement calling for a new direction for the party that would welcome the working class and young voters and that would remain neutral in future Democratic primary contests.