She will be succeeded by Deirdre O'Brien – an executive who has worked at Apple for 30 years.
During her five-year tenure, Ahrendts spearheaded a series of innovative changes to the tech giant's bricks-and-mortar retail spaces – including sales assistants with handheld payment devices, turning shops into community hubs and adding planting.
Ahrendts oversaw creation of new Apple Stores
"The last five years have been the most stimulating, challenging and fulfilling of my career," said Ahrendts in a statement. "Through the teams' collective efforts, retail has never been stronger or better positioned to make an even greater contribution for Apple."
"She has been a positive, transformative force, both for Apple's stores and the communities they serve," added CEO Tim Cook.
Ahrendts, 58, left her position as CEO of British fashion house Burberry to join the Silicon Valley company in 2014, where she was placed in charge of revamping its stores.
The company opened a slew of Foster + Partners-designed international flagships and shops under her direction. Today, the company operates 506 physical retail stores on five continents, as online stores that serve 35 regions.
Ahrendts reinvented Apple Stores as "town squares"
New spaces followed a "town square" concept, which aimed to create thriving public spaces for the local community. Many feature open spaces and large amounts of trees, and are located prominently in cities – like Paris' Champs-Élysées and New York's Grand Central Station.
The company also established the Today at Apple programme of free in-store educational sessions delivered by specialists, with spaces designed to deliver these accordingly. In the Chicago shop for example, an upper level includes tiered seating for the public to relax, and an open-plan lower floor.
Ahrendts' described O'Brien as a natural successor. "I feel there is no better time to pass the baton to Deirdre, one of Apple's strongest executives," she said.
O'Brien to become senior vice president of Retail + People
"I look forward to watching how this amazing team, under her leadership, will continue to change the world one person and one community at a time."
O'Brien, who currently heads Apple's human resources, will take on the position of senior vice president of Retail + People, reporting directly to Cook. It is suggested she will merge her existing role with Ahrendts' to manage the company's 70,000 retail employees and lead the retail strategy.
"Deirdre understands the qualities and strengths of our team better than anyone," said Cook. "For more than three decades, she has helped keep Apple focused on serving customers and enriching lives."
"People come to Apple to do the best work of their lives, and our retail teams show their passion every day, in every interaction, all around the world," said O'Brien.
Apple iPhone sales decline
Apple's change in leadership follows news that sales have taken a major hit in recent years. In financial results reported in January this year, the company revealed it would miss revenue targets this quarter, and that revenue from iPhone sales had declined by 15 per cent since last year.
Owen Hatherley responded to the news in an Opinion column for Dezeen, predicting the end of the iPhone's reign of supremacy.
Portrait of Angela Ahrendts is by Mike Dotta/Shutterstock.