Donald Trump announced the news on Monday in an unexpected tweet as he praised his relationship with Mr Barr.
He also revealed Deputy Attorney General Jeff Rosen, whom he labelled an “outstanding person,” will be filling in the Acting Attorney General position.
He wrote: “Just had a very nice meeting with Attorney General Bill Barr at the White House.
“Our relationship has been a very good one, he has done an outstanding job! As per letter, Bill will be leaving just before Christmas to spend the holidays with his family…
“Deputy Attorney General Jeff Rosen, an outstanding person, will become Acting Attorney General.
“Highly respected Richard Donoghue will be taking over the duties of Deputy Attorney General. Thank you to all!”
Mr Barr explained in his resignation letter that Mr Trump had been brought up to date on Monday on the department’s “review of voter fraud allegations in the 2020 election and how these allegations will continue to be pursued.”
He also confirmed his last day of work as December 23.
In February Mr Barr told people close to Mr Trump he was considering resigning over the President’s tweets about Justice Department inquiries, three administration officials told the Washington Post.
Mr Barr had reportedly warned Mr Trump against tweeting about Justice Department cases, to no avail.
At the time, Mr Barr told ABC News: “I’m happy to say that, in fact, the president has never asked me to do anything in a criminal case.
“However, to have public statements and tweets made about the department, about our people in the department, our men and women here, about cases pending in the department, and about judges before whom we have cases, make it impossible for me to do my job and to assure the courts and the prosecutors in the department that we’re doing our work with integrity.”
Speaking to reporters, Mr Trump admitted he was aware the tweets were difficulting the department’s job.
However, he argued he had “total confidence in my attorney general” but insisted that “everybody has the right to speak their mind.”
Mr Trump claimed the social media platform allows him to express himself, whereas in traditional media “I don’t get that voice”.
He said: “Yeah, I do make his job harder. I do agree with that. I think that’s true.
“He’s a very straight shooter. We have a great attorney general, and he’s working very hard…
“But I will say this: Social media, for me, has been very important because it gives me a voice, because I don’t get that voice in the press.
“In the media, I don’t get that voice. So I’m allowed to have a voice.”
Democrats have led calls for Mr Barr to step down and Senate Democratic leader Chuck Schumer urged the Justice Department’s inspector general to begin an investigation into the attorney general’s role in the sentencing reversal.
Mr Barr was also accused of acting more like the President’s personal attorney than the attorney general.
However, he was defended by Trump allies including Sen Lindsey Graham, as well as Senate Majority Leader Mitch McConnell, House Minority Leader Kevin McCarthy.
The group co-authored a statement, labelling Mr Barr a “man of the highest character and unquestionable integrity.”