Haider announced he was stepping down in February, but the official change of office was to take place Monday at the party's congress being held in Klagenfurt, the capital of Carinthia, where Haider serves as governor. Vice Chancellor Susanne Riess-Passer has been named as his replacement.
Haider, 50, gained notoriety for his statements praising the "orderly" full employment policies of Adolf Hitler, and calling Waffen SS veterans "men of honor." He has repeatedly apologized for such remarks.
But his apologies have done little to ease diplomatic sanctions by the rest of the European Union against Austria after the Freedom Party joined a governing coalition with the conservative Austrian People's Party in February. He hopes stepping down as party head will change that.
Speaking to local Radio Carinthia, Haider said Monday he is "not at all sad" about stepping down. He praised the Freedom Party for its success in growing from a virtually unknown political entity to Austria's second most powerful party in 14 years.
"The whole time was a success story, unlike any other party in Europe," he said. "There are many politicians, even chancellors who have left office without leaving any trace behind."
In Vienna, 80,000 people packed the vast square in front of City Hall for an anti-government demonstration led by the Socialist Party as part of its annual May Day celebration.
Carrying anti-government banners and calling for an Austria that is "Open. Democratic. Socialist," the protesters gathered briefly for speeches by Socialist leaders before disbanding peacefully.