Her departure continues an exodus of key aides and confidants to President George W. Bush, whose two-term presidency is in its final 15 months. Top aide Karl Rove, along with press secretary Tony Snow and senior presidential adviser Dan Bartlett, already left this year.
Mr. Bush said in a statement Monday that Townsend, 45, "has ably guided the Homeland Security Council. She has played an integral role in the formation of the key strategies and policies my administration has used to combat terror and protect Americans."
In her resignation to Mr. Bush, Townsend indicated she was returning to the private sector, saying in a handwritten letter, "As you know, it is with a profound sense of gratitude that I have decided to take a respite from public service."
Mr. Bush noted in his statement that Townsend prosecuted violent crimes, narcotics offenses, Mafia cases and white-collar fraud as an assistant district attorney in the New York City borough of Brooklyn and as an assistant U.S. attorney in the Manhattan borough.
No reason was cited for Townsend's departure, and there was no word on a successor.
Townsend, who at one point had figured in speculation as to who would head the then-new Department of Homeland Security, was a familiar face in the United States, often appearing to argue the administration's position on morning news and Sunday interview shows.
When Democratic Sen. Russ Feingold said Mr. Bush should refrain from using the phrase "Islamic fascists" on grounds it was offensive to Muslims, Townsend explained the president's use of the phrase.
"What the president was trying to capture was this idea of using violence to achieve ideological ends - and that's wrong," she said at a news conference. "Regardless of what label you pin on it, it is this form of radical extremism that really wants to deny people freedom and impose a totalitarian vision of society on everyone that we object to."
This past July, following the release of a National Intelligence Estimate which concluded that al Qaeda is using its growing strength in Pakistan and Iraq to plot attacks on U.S. soil, Townsend refuted CBS Early Show co-anchor Hannah Storm's suggestion that the report showed the U.S. continues to face threats from a resurgent al Qaeda.
"What the report tells us is that we have constrained al Qaeda's ability to act against us - that al Qaeda believes, based on billions of dollars that we've spent, that we are a more difficult and less vulnerable target for them," she told Storm.
In September she made more than one public comment that al Qaeda leader Osama bin Laden was "virtually impotent," despite the resurgence of al Qaeda in the border area of Pakistan.
"This is about the best he can do," Townsend said of his repeated release of propaganda tapes. While the tapes have reminded the world of the six-year failure to capture him, on CNN's "Situation Room" she chose to characterize the efforts to capture or kill bin Laden as "a success that hasn't occurred yet."
She has also dismissed charges that the CIA's interrogation tactics used on terrorism suspects were torture, saying to CNN that the CIA uses the "least harsh" methods first on detainees and get progressively harsher, until such time as the subject becomes "cooperative."
"When detainees are cooperative, the interrogation tactic stops and it turns into a debriefing," she said.
She had a high profile in the administration's recent response to the devastating wild fires in California, defending the White House reaction to the disaster as going "exactly the way it should be" and assuring Californians the federal response would be "better and faster" than its performance after Hurricane Katrina's strike against the Gulf of Mexico coastal states in 2005.
Townsend's departure is the latest among the lineup of players Mr. Bush brought to Washington.
He saw longtime friend, aide and confidant Alberto Gonzales resign in September in the face of a convulsive uproar in Congress over the dismissals of a slew of federal prosecutors and in connection with the administration's warrantless wiretap program. Defense Secretary Donald H. Rumsfeld resigned just after the time of the 2006 elections in which Democrats, harping on a get-out-of-Iraq theme, regained control of Congress.