The 55-year-old initially moved to the former Premier League champions in 1997 as a finance director, but was then handed the chief executive role in 2003.
Despite Gill's decision to leave his position, the club have announced that he will remain within the North-West club as a director.
"It has been the greatest privilege to serve Manchester United for 16 wonderful years, the last 10 of which as its chief executive," Gill told the club's official website. "I have worked alongside the finest manager in the history of the game and been part of what I consider to be the best club in the best sport in the world.
"It has been a very hard decision because I love this club and, as the fans' banner says, it is, 'more than a religion'. However, I have always been conscious of the fact that, as a member of staff, I was always just a temporary custodian of this marvellous institution."
Manager Sir Alex Ferguson added: "David has been a magnificent chief executive. Of course, we have had a million arguments, but I have always enjoyed them because I know that David has two great qualities - he is straight and he always puts Manchester United first.
"No disagreement is ever personal with him. He always wants the best for United, whether it's the players, the training ground or the staff. Him stepping down is a big loss to me but the fact that he is staying on the board encourages me that the reason for his departure is heartfelt, that he believes it is time for the club to move on. If I could have found a way of persuading him to stay I would love to have done that. But he has made his decision and I respect him for it."
Executive vice-chairman Ed Woodward will replace Gill following his departure.