"I depart this office without bitterness or resentment", he said, nearly a year after he was elected as SPD party head with 100 percent of the vote.
Schulz announced his immediate resignation from the chairman position Tuesday afternoon after the SPD has been rocked by internal strife following last year's election results, Der Spiegel reports.
With many SPD rank and file harboring misgivings about sharing power with Merkel again, the result of the vote, due on March 4, is wide open.
The SPD's 464,000 members vote in a postal ballot beginning on February 20 on whether the party should go ahead with the agreement its leaders clinched last week to renew their power sharing alliance with Merkel's conservative bloc.More news: Trump Signs 2-Year Spending Pact
Schulz said last week he would quit to allow the party to regroup and he recommended Nahles as leader.
In his resignation, Schulz gave his endorsement to parliamentary group leader Andrea Nahles for a leadership election that will take place on April 22nd. "No more indiscipline in the SPD", said Ralf Stegner, the regional SPD leader in Schleswig-Holstein.
Nahles said she would start campaigning at the weekend for members to vote "yes" to a coalition with Merkel, who has led the European Union's most populous country and economic powerhouse since 2005.
The embattled leader of the SPD suddenly gave up plans to become the next foreign minister on Friday, hoping to shore up support among SPD members for a new coalition with Mrs. Merkel's Christian Democrats.
Schulz has also been criticized by fellow SPD politician and current Foreign Minister Sigmar Gabriel for pursuing the post.More news: U.S. coalition kills 100 fighters in air and artillery strikes
Schulz's own plans were becoming a major distraction for the SPD.
The SPD has agreed on a blueprint for coalition government with Ms Merkel's Christian Democrats (CDU) and her Bavarian CSU allies.
An INSA poll published on Tuesday showed the SPD at a record low of 16.5 percent, only 1.5 percentage points ahead of the far-right Alternative for Germany (AfD).
They argue that the SPD needs to go into opposition to rebuild its identity and reconnect with voters, because at the moment too little divides Germany's two largest parties. The deal has potentially paved the way for Germany to finally form a government after months of political instability following the indecisive parliamentary elections in September.More news: Video shows woman believed to have left newborn, note in airport bathroom
- Sunjuwan Army camp attack: Second terrorist gunned down
- United Kingdom charity responds to Haiti misconduct claims
- Egypt: Anti-IS operation kills 16 jihadists
- India hopes to see Palestine becomes sovereign soon: PM
- North Korea's Kim Invites S. Korean President for Summit: S. Korea
- Duterte orders military to cancel helicopter deal with Canada
- Eminent Pakistani lawyer, activist Asma Jahangir dead
- Hong Kong benchmark heads for correction as China shares tumble
- Apple AirPod Allegedly Explodes, Apple Investigating
- Auto Expo 2018 highlights: Electric Vehicles steal the limelight