In a fiery campaign-style speech, Palin said she was stepping down to take her political battles to a larger if unspecified stage and avoid an unproductive, lame duck status.
"With this decision, now, I will be able to fight even harder for you, for what is right, and for truth. And I have never felt that you need a title to do that," Palin said to raucous applause from about 5,000 people gathered at Pioneer Park in downtown Fairbanks.
Her first order of business as a private citizen is to speak Aug. 8 at the Ronald Reagan Presidential Library in California. She also wants to campaign for political candidates from coast to coast, and continue to speak her mind on the social networking site Twitter, one of her favorite venues to reach out to supporters.
Free speech was a theme of her farewell speech at a crowded picnic in Fairbanks, as the outgoing governor scolded "some seemingly hell bent on tearing down our nation" and warned Americans to "be wary of accepting government largess. It doesn't come free."
She also took aim at the media, saying her replacement, Lt. Gov. Sean Parnell, "has a very nice family too, so leave his kids alone!"
And she told the media: "How about, in honor of the American soldier, you quit makin' things up?"
She didn't elaborate, but Palin said when she announced her resignation July 3 that she was tired of the media focus on her family and felt she had been unfairly treated by reporters and bloggers.
Friend and foe alike have speculated that Palin may host a radio or TV show, launch a lucrative speaking career or seek higher office in Washington.
Palin hasn't ruled out any of those options, and her political action committee, SarahPAC, has raised more than $1 million, said Meghan Stapleton, a spokeswoman for the committee and the Palin family.
Stapleton said Palin is still deciding what her future will be.
"I cannot express enough there is no plan after July 26. There is absolutely no plan," she told The Associated Press.
Palin's surprise announcement she was stepping down 17 months before the end of her first term pushed her favorability rating down to 40 percent, according to a Washington Post-ABC poll. Fifty-three percent of those polled gave her an unfavorable rating.
Last summer, almost six in 10 Americans viewed her favorably. The latest poll was taken July 15-18.
Nearly 20 ethics complaints had been filed against Palin, and the outgoing governor cited the resulting investigation's financial toll - both on her and the state - for stepping down. An independent investigator looking into the complaints found evidence she may have violated ethics laws by trading on her position as she sought money for lawyer fees, according to a report obtained recently by The Associated Press.
Watch video of Palin's resignation speech:
Parnell, 46, of Anchorage, was sworn in Sunday as the state's new governor.
"I'm firmly convinced that Alaska's greatest days are ahead," Parnell said in pledging to continue Palin's policies, which he said "put Alaska first."
Palin received a warm welcome Sunday, both during her speech and as she served food at the annual Governor's Picnic.
Among those present was Donna Michaels, 57, of Fairbanks, who wore a red T-shirt that said: "Palintologist."
The T-shirt defined a Palintologist as "someone who studies Palin and shares her conservative values, Maverick attitude and American style."
Michaels also held a poster board sign showing the front page of the Fairbanks Daily News-Miner when Palin announced she would resign. Michaels altered the banner headline "Palin steps down," replacing the last word with "up."
"She's really not stepping down. She's stepping up to do something bigger and better," said Michaels, who attended the picnic with her daughter and two granddaughters, one of whom who wore Sarah Palin-style eyeglasses.
Larry Landry, 51, of Fairbanks held up a red, white and blue sign that that read, "Quitting: the new American value." The other side read: "Thanks for the laughs."
Landry, a registered independent, said he respected Palin when she ran for governor in 2006, but he felt she changed during last year's presidential campaign.
"She turned into a vicious vixen," he said. "She descended into ugly, divisive politics."
Alaska's first female governor arrived at the state Capitol in December 2006 on an ethics reform platform after defeating two former governors in the primary and general elections. Her prior political experience consisted of terms as Wasilla's mayor and councilwoman and a stint as head of the Alaska Oil and Gas Conservation Commission.
Unknown on the national stage until Republican John McCain tapped her as his running mate, Palin infused excitement into the Republican's presidential bid. But she also became the butt of talk-show jokes and Democratic criticism, especially after it was revealed that the Republican Party spent $150,000 or more on a designer wardrobe for Palin.
Former state House Speaker John Harris, a Republican with sometimes chilly relations with Palin, said he thinks Palin will run for president in 2012, although he has no inside information.
Stapleton said the answer will emerge in the coming weeks.
On Monday, "we'll sit down and say, 'OK, here are your options. How do you now want to effect that positive change for Alaska from outside the role as governor?"' Stapleton said.