Finance director Anne Bulford will lead Channel 4 on an interim basis in the event that Duncan leaves before his successor is in place.
The decision, which had been expected following weeks of speculation over Duncan's position, leaves Channel 4 searching for a new chief executive at a critical time in its history.
It has been locked in talks with BBC Worldwide in recent months to seal a joint venture aimed at securing its future financial footing. However, such a deal has, despite the urgings of the Government through its Digital Britain report, so far failed to materialise.
It also faces a major programming upheaval after deciding to axe Big Brother after next year's series.
Duncan said: "By any measure, it's been a great five years, during which time we've punched well above our weight, out performing our immediate rivals both creatively and commercially. The British public are watching and using more of our TV programmes, film and online content and services than ever before. Having coped with dramatic structural change and an unprecedented downturn substantially better than most, I believe Channel 4 is in a great position to face the future with real confidence."
He said that the publication of the Digital Britain report was "a natural moment for me to take stock", adding that "with a fresh regulatory cycle looming and with the cancellation of Big Brother signalling the most significant creative renewal in our history," he has agreed "this feels like the appropriate moment for me to hand on the baton".
However, he insisted that before he leaves he intends to leave the broadcaster in good shape. "In my remaining months, I intend to see through important further steps towards securing the best possible future for this organisation, including the update of our remit and the completion of a number of exciting commercial partnerships currently under discussion."
Chairman Luke Johnson said: "The board is grateful for Andy's effective leadership. Channel 4 has enjoyed record creative and commercial success in the last five years while skilfully navigating the seismic upheavals in digital media. When the time comes, he will depart with our best wishes for his future success.
"In the meantime, we will immediately get on with the process of appointing his successor. We will move swiftly to appoint headhunters with a view to appointing a replacement in due course. I have asked our finance director, Anne Bulford, to lead the Group on an interim basis in the event that Andy leaves before his successor is in place."
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