Powell, who has held the job for four years, said in a statement that he informed President Bush that he would depart in March.
Powell, the son of Secretary of State Colin Powell, who also is leaving the Bush administration, said he had completed a "bold and aggressive agenda" and looked forward to spending more time with his wife and two sons.
"Chairman Powell has been a valued member of the administration," White House spokeswoman Erin Healy said. "He has shown a strong commitment to expand the reach of new communications technologies and services and has helped advance the president's goal that all Americans should have access to affordable broadband by 2007."
There was no immediate word on a successor.
Powell cited the growing popularity of cell phones, digital television, and digital music players as evidence of the technological advances during his tenure.
"Evidence of our success can be seen increasingly in the offices, the automobiles and the living rooms of the American consumer," Powell said. "The seeds of our policies are taking firm root in the marketplace and are starting to blossom."
Jonathan Cody, a friend and FCC adviser to Powell on media ownership, said Powell assessed his tenure at the FCC during the holidays and felt that he had accomplished his goals.
Powell, a champion of deregulation who critics had said was too pro-big business, rose from commissioner to chairman when Bush took office in 2001. His term was to run until 2007.
While tackling complex issue ranging from telephone competition to rules for media ownership, Powell is perhaps best known for overseeing a dramatic crackdown on broadcast indecency that began before the infamous "wardrobe malfunction" during singer Janet Jackson's Super Bowl halftime performance last February.
The FCC received more than 1 million indecency complaints in 2004, most of them involving Jackson. CBS is contesting a proposed FCC fine of $550,000 for the incident.
Fines for indecent programming exceeded $7.7 million last year, a huge increase from the $48,000 imposed the year before Powell became chairman. Powell has praised the record fines, saying the commission was "wielding our sword" to protect children and viewers who object to racy programming.
"It's the most uncomfortable area you'd ever want to work in, enforcement," Powell said of indecency fines at a July 2004 symposium. "I'm a big believer in the First Amendment, but often I'm incredibly uneasy about lines we have to draw. No one takes pleasure in trying to decide whether this potty-mouth word or that potty-mouth word is a violation of the law."
No show produced more FCC fines than that of raunchy radio personality Howard Stern, who last October confronted Powell in a surprise phone call while the FCC chairman was a guest on KGO-AM radio in San Francisco.
Stern accused Powell of using the FCC to stifle free speech on radio and TV and contended Powell got the job because of his family name. Powell responded, "I think it's a cheap shot to say just because my father is famous, I don't belong in my position."
Powell also told Stern, "I don't think that, you know, we have made any particular crusade of the Howard Stern show or you."
Powell led the Republican-dominated FCC in easing decades-old rules governing ownership of newspapers and television and radio stations. The commission approved changes in 2003 that allow individual companies to own TV stations reaching nearly half the nation's viewers and combinations of newspapers and broadcast outlets in the same community.
Major media companies said the changes were needed because the old regulations hindered their ability to grow and compete in a market altered by cable television, satellite broadcasting and the Internet.
But lawmakers from both parties and a broad range of groups criticized the changes, saying the FCC regulations give large media companies too much control over what people see, hear and read.
Congress and the courts are considering several efforts to modify or repeal the rules.
Sen. Charles Schumer, D-N.Y., said Powell "instinctively sided with industry," but praised him for fighting to allow consumers to keep their cell phone numbers when they switch carriers.
"This is an important achievement and is one that will lead to increased competition and better service for all cell phone users," Schumer said.
An aide to Sen. Ted Stevens, R-Alaska, chairman of the Senate Commerce Committee, said Stevens has recommended to Bush that a former Stevens adviser, Washington attorney Earl Comstock, be nominated for the spot on the commission once Powell steps down.
But Stevens' office said there have been no discussions with the White House as to who should assume the chairmanship.
By: (AP) Federal Communications Commission Chairman Michael K. Powell, who opposed tight regulation of telecommunications but backed unprecedented fines against broadcast indecency, announced today he is resigning.