She has been at the British Bankers’ Association for five years but says she will remain until her replacement is found.
Prior to joining the BBA in April 2007 she was chief executive of the Association of Private Client Investment Managers and Stockbrokers.
She also worked as Economic Secretary to the Treasury under John Major between 1995 and 1997.
Ms Knight said: “I have been at the British Bankers’ Association at a time of extraordinary difficulty and during a crisis of a magnitude that few if any have seen before or expected.
“The BBA has played a strong part throughout this challenging period and has helped the industry it represents with the significant changes to regulation and legislation required.
“The UK banking industry has already undergone radical restructuring to make it fit for the future and I am pleased to have played a part in this.”
Marcus Agius, chairman of the BBA, said: “I would like to pay tribute to Angela Knight’s extraordinary leadership and energy. She has piloted the British Bankers’ Association - and the industry - with skill and determination through turbulent times and leaves the organisation strengthened and well placed to respond to the challenges ahead.”
Ms Knight is the second high-profile chief executive to leave the industry following Hector Sants, chief executive of the Financial Services Authority, departure announcement last month.