"My family circumstances and responsibilities, particularly with regard to the education of my children, are the reason for relinquishing earlier than expected my responsibilities at the Fund," he said in a statement to the board of the 185-nation lending institution.
De Rato, 58, a former Spanish economy minister, told the executive board of the 185-nation lending organization he would leave in October after the IMF's annual meeting.
He was due to end his five-year term in May 2009. He succeeded Horst Koehler, now Germany's president, in May 2004.
The IMF and its downtown Washington neighbor, the World Bank, were founded at the end of World War II to promote global economic stability. The IMF came to the rescue of economies in Asia and Latin America in the late 1990s when they faced financial crises but in recent years, its lending role has been reduced.
In a tradition that dates to the founding of the two organizations, a European is the managing director of the IMF and an American is president of the World Bank. Nongovernmental organizations and others that work with the IMF and World Bank say the system is outmoded and should be changed.
Former U.S. Trade Representative Robert Zoellick takes over this weekend as head of the World Bank, replacing Paul Wolfowitz.
Wolfowitz had courted controversy from the start of his term because of his role in the Iraq war when he was deputy U.S. defense secretary. But it was his role in arranging a hefty pay increase for Shaha Reza, his girlfriend and a bank employee, that forced his departure.
In his statement to the IMF board about his looming departure, de Rato said in his remaining months in office he "remains absolutely determined to make further progress on all aspects" of governance issues, including individual countries voting rights and the money that countries put toward the fund called quotas.
The IMF has come under criticism in recent years because emerging economies such as Brazil, India and China, do not have as much of a say in its operations as wealthy nations.
The United States is the largest shareholder in the IMF
Earlier this month, the IMF announced it had adopted new guidelines for how countries should conduct their foreign currency policies, a move the Bush administration had sought as a way to apply more pressure on China to reform its exchange rate.
"The change we are making is the first major revision in the surveillance framework in some 30 years and it is the first ever comprehensive policy statement on surveillance," de Rato said in a speech.
The IMF's work in this field has gained urgency as an effort to reduce global imbalances including soaring trade deficits in the United States and surging trade surpluses and currency reserves in China and other Asian nations.
De Rato said the new rule "gives clear guidance to our members on how they should run their exchange rate policies, on what is acceptable to the international community and what is not."