Paxman has hosted the show for over 28 years, having taken the reins from predecessor Bamber Gascoigne in 1994.
In a statement Paxman, who is 72-years-old, said: "I’ve had a blast hosting this wonderful series for nearly 29 years.
"I’ve been lucky enough to work with an amazing team and to meet some of the swottier brains in the country. It gives me hope for the future."
Peter Gwyn, Executive Producer of University Challenge, said: ‘Jeremy has been our presenter, colleague and friend for twenty-eight years, and everyone on the University Challenge production team will miss him greatly.
‘He’ll be sorely missed too by both our audience and by the generations of students who’ve relished the chance to pit themselves against him in more than a thousand matches.’
Kate Phillips, the BBC’s Director of Unscripted, said Paxman was "without doubt one of the world’s finest, and most formidable quizmasters" and had been "at the front and centre of the show’s success.”
She added: "We are hugely grateful to Jeremy for his dedication to the programme for an incredible 28 years, he will be much missed by us all and the show’s millions of viewers."
Why is Jeremy Paxman stepping down?
Paxman didn’t give a reason for his stepping down from the role, but the news comes around a year after the presenter announced he had been diagnosed with Parkinson’s Disease.
When will Jeremy Paxman’s last appearance on the show be?
Paxman will continue to be the show’s host into 2023, and his final appearance will be broadcast in the summer.
Who will replace him?
The BBC have announced that a replacement for Jeremy Paxman will be announced later this week.