Mrs May was close to tears as she told the country of her plans to quit, following days of speculation about her future after the negative reaction to her most recent version of the Withdrawal Agreement.
She will now resign on Friday 7 June, with the Conservative leadership contest taking place from the following Monday.
In her resignation speech, Mrs May also made a clear statement to her potential successor, stating “compromise is not a dirty word”.
Who could be the next Prime Minister?
The next Prime Minister will be a Conservative politician. There is no chance of a general election ahead of the result, meaning Jeremy Corbyn or other opposition party figures will not be among the contenders for the top job.
Boris Johnson, the former Foreign Secretary and ex-Mayor of London, is the bookies’ favourite for the job and has significant grassroots support.
Dominic Raab, the former Brexit Secretary who negotiated the Withdrawal Agreement and then resigned over the draft agreement, is another favourite, and is also a hard Brexiteer like Johnson.
The candidate Theresa May defeated in the last Tory leadership election in 2016, Andrea Leadsom, has also confirmed she will run again after resigning as the Leader of the House of Commons.
Other cabinet ministers and senior Conservatives, such as International Development Secretary Rory Stewart, former Work and Pensions Secretary Esther McVey and current Foreign Secretary Jeremy Hunt, are all expected to run.
Liz Truss, Sajid Javid, Philip Hammond, Amber Rudd, Michael Gove, and Matt Hancock are other cabinet ministers likely to throw their hat into the ring.
Who do you want to see as Prime Minister? Take part in our poll.
How will the next Prime Minister be chosen?
There are two stages of the Conservative party leadership election with one involving only MPs and the second involving all party members.
The first part sees Conservative MPs nominate their leadership candidates and then vote on the potential leaders, with the MP with the lowest amount of support eliminated. This process is followed until the party is left with two candidates, either through elimination votes or through candidates dropping out of the race.
The two candidates are then put to a vote of the party membership on a one member one vote basis, with the next leader of the Conservative party and Prime Minister being the candidate with the most votes.