"In my time as general manager, I gave my entire heart and soul to the organization," Epstein said in a statement. "During the process leading up to today's decision, I came to the conclusion that I can no longer do so. In the end, my choice is the right one not only for me but for the Red Sox."
Epstein will continue working for a few days to assist in the transition and prepare for the offseason. The Boston Herald, which first reported the news on its Web site, said the Yale graduate has told associates that he might leave baseball, or at least take a year off.
The Dodgers, Phillies and Devil Rays have GM openings, but none has a $120 million payroll to match the one Epstein was given in Boston.
The 31-year-old Epstein was reportedly offered about $4.5 million for a three-year extension — quadruple his previous salary. But it was still short of the $2.5 million a year the Red Sox offered Oakland's Billy Beane in 2002 before making Epstein the youngest GM in baseball history.
Although Epstein and team president Larry Lucchino haggled over money, the Herald said Epstein also went through "agonizing soul-searching" over office politics and his relationship with his mentor. The Herald said published reports that contained inside information about their relationship, "slanted too much in Lucchino's favor," helped convince Epstein there had been a breach of trust.
Red Sox pitcher Curt Schilling told The Associated Press he was disappointed but had seen indications the move might be coming.
"You don't get better losing a guy like Theo," said Schilling, who joined the Red Sox after Epstein ate Thanksgiving dinner with him and convinced him to accept a trade from the Arizona Diamondbacks.
"It's obviously going to be an incredibly unpopular decision with the players. But we'll show up in spring training and get ready for the season and try to win another World Series. It's not like we're going to have a sit-down."