The British-born designer revealed in a statement on the technology brand's website that he will be leaving his role before the end of the year, having spent nearly 30 years at the company.
Ive will continue to work with Apple
He will "continue to work closely" with Apple whilst he pursues "personal projects", the company said.
Ive is credited with helping to turn around Apple's fortunes and is responsible for many of the brand's most successful and distinctive products .
"After nearly 30 years and countless projects, I am most proud of the lasting work we have done to create a design team, process and culture at Apple that is without peer," said Ive in the statement.
"Today it is stronger, more vibrant and more talented than at any point in Apple's history."
Marc Newson will join new venture
Whilst Ive has offered few details about his new venture, LoveFrom, in an interview with the Financial Times he suggested that Australian designer Marc Newson – who joined him at Apple in 2014 – will be involved, as well as a "collection of creatives" with "diverse areas of expertise".
The continuing relationship with Apple will allow Ive to proceed with ongoing projects.
"There are products that we've been working on for a number of years — I'm beyond excited that I get to continue working on those. And there are some new projects as well that I'll get to develop and contribute to," said Ive to the newspaper.
"While I will not be an employee, I will still be very involved — I hope for many, many years to come. This just seems like a natural and gentle time to make this change."
As well as working with Apple, LoveFrom is likely to work in the fields of healthcare and wearable tech and will be based in California, the designer said.
"I certainly have an ambition and feel almost a moral obligation to be useful," he told the newspaper.
Internal appointments to head design team
Ive's position will not be directly replaced. Instead, existing team members will step up to head different divisions.
Vice-president of industrial design Evans Hankey will head up hardware design, with human interface design vice-president Alan Dye in charge of software design, reporting to chief operating officer Jeff Williams.
"The team will certainly thrive under the excellent leadership of Evans, Alan and Jeff, who have been among my closest collaborators," said Ive in the statement.
"I have the utmost confidence in my designer colleagues at Apple, who remain my closest friends."
"Evolution" of relationship between Apple and Ive
Apple CEO Tim Cook described the departure as an "evolution" of Ive's relationship with Apple.
"Jony is a singular figure in the design world and his role in Apple's revival cannot be overstated, from 1998's groundbreaking iMac to the iPhone and the unprecedented ambition of Apple Park, where recently he has been putting so much of his energy and care," said Cook.
"Apple will continue to benefit from Jony's talents by working directly with him on exclusive projects, and through the ongoing work of the brilliant and passionate design team he has built."
Ive became head of Apple's design studio in 1996, at a difficult point in the company's history and is considered to be an integral part of its reversal of fortune. Last summer, Apple became the world's first trillion dollar company.
Author of a 2013 biography of the designer, Leander Kahney, told Dezeen at the time that Ive was more important to Apple than Steve Jobs was when the former Apple CEO passed away and that the company would be "in trouble if he left".
Photography is by Marcus Dawes.