Rumours surrounding the 59-year-old's future have rumbled over the last few months, with a final decision expected to be made after last weekend's F1 finale in Brazil.
Brawn said: "The most important consideration in my decision to step down from the role as team principal was to ensure that the timing was right for the team in order to ensure its future success.
"The succession planning process that we have implemented during this year means we are now ready to conduct the transition from my current responsibilities to a new leadership team composed of Toto and Paddy."
Non-executive chairman Niki Lauda added: "We have had long discussions with Ross about how he could continue with the team but it is a basic fact that you cannot hold somebody back when they have chosen to move on. Ross has decided that this is the right time to hand over the reins to Toto and Paddy and we respect his decision."
Brawn will officially step down from his position on December 31.