WPP stated that the amounts involved in Sorrell's alleged misuse of company funds were "not material" to the company, leading one United Kingdom agency chief executive to question the board's intentions. Its constituent parts, especially the health and digital divisions, are worth far more than WPP's share price, he added, which has fallen by more than 40% from its February 2017 peak.
WPP's corporate development director and chief operating officer for Europe Andrew Scott and, Wunderman CEO Mark Read would don the mantle of co-chief operating officers.
"It is hard to see a future for WPP", the chief executive said. However, I believe it is in the best interests of the business if I step down now.
The reasons for his departure have not been made public, although the investigation, which was only revealed at the start of the month, has now finished.
Sorrell has denied the allegations, but said Saturday that the "current disruption" was "putting too much unnecessary pressure on the business".
The move follows an investigation into allegations of improper behavior and misuse of assets.
The company said Sir Martin will be treated as having retired, with chairman Roberto Quarta becoming executive chairman until a new chief executive has been appointed.
"Obviously I am sad to leave WPP after 33 years", Sorrell says in a statement. He said he'd spent every day of the last 33 years thinking about the future of the company, which he built into the world's largest and most successful advertising firms. Sir Martin would of course assist with the transition.
Shares in WPP are expected to fall tomorrow when the markets open.
The 73-year-old also established himself as one of relatively few British business leaders who are recognised around the world.
The probe served to intensify scrutiny on Sorrell and WPP's succession planning, long criticized by investors as being insufficient, prompting speculation that a CEO long seen as unstoppable might be forced to step aside.
There's big news in the world of advertising. For example, the Vice-owned creative agency Carrot is said to have fostered what many described as a hostile work environment for women.
However, the firm has struggled in the past year, with shares falling back from heights above £19 in February to less than £12 at the close of markets last Friday.
"If WPP does well, I do well", he told the Press Association in April 2016.
WPP declined to comment on Saturday evening, while Sir Martin could not be reached for comment.