The 66-year-old Piniella made the announcement in a release handed out by the team. Third base coach Mike Quade was promoted to interim manager.
With the Cubs a mile out and retirement coming at the end of the season anyway, Piniella decided to step down after Sunday's game with the Atlanta Braves. He says his mother's health is not improving and he wants to spend more time with her.
Piniella said last month he planned to retire at the end of the season and reiterated his plans just Saturday. But he missed four games in August to be with his ailing mom in Florida and it appears he felt he needed to spend more time with her.
"I need to be home," Piniella said before Saturday's 5-4 victory over Atlanta. "My circumstances have changed a heck of a lot the last year, especially the last month or so. I just need to be home.
"I'm concerned about my mom. I love baseball but I love my family. When you talk about your family, it's a little more important than baseball, it's a lot more important."
Some fans attending Sunday's Cubs-Braves game said they were surprised, but they understood Piniella's decision to retire.
They were also very respectful towards Piniella. Many of them heard the news on the way to Wrigley.
"I'm very surprised. I thought he was going to wait for the end of the season, but I can understand on his part. It's not like the guy doesn't have any family. So, I totally respect his decision," said Cub fan Silviano Delatorre.
"I've been a Cubs fan for, oh, gosh, 40 years. I'm sad that he's leaving and for the reason that he is, and I wish him the best of luck. I just hope everything goes very well for him," fan Laura Durava said.
Piniella says he's leaving this season because his ailing mother in Tampa needs him home. His decision to retire before the end of the season capped his baseball career, which began as a player with the New York Yankees in the late 1960s. Though Piniella was a rookie, Bobby Cox was wrapping up his major league career. So, how appropriate that the longtime braves manager, who is also retiring this year, was honored for his last game at Wrigley Field.
The two managers will be a big part of baseball history, but some Cubs' fans say it's time for the Cubs organization to hire a younger manager.
"The Cubs need some change. The Cubs need change. He's an old man. Out with the old, in with the new," Brett Nielsen said.
Piniella may want to get out while he can after a lousy game that goes along with a pretty lousy season.
"Today's game wasn't pretty, but I'd rather reflect on the good times I've had here," Piniella said.
That was the first statement out of Lou Piniella's mouth during the post-game new conference. He continued and became very emotional. It might have hit him during the press conference that it would be the last time he'd be in a Cubs uniform.
Entering Sunday's game, Piniella's overall record was 1,835-1,712 (.517). He trails only Tony La Russa, Bobby Cox and Joe Torre in victories among active managers.
Piniella's record with the Cubs was 316-292. Under the mellowed skipper, Chicago won consecutive NL Central titles in 2007-08, but missed the playoffs last year and has struggled again this season with a new owner in charge.
In 18 years in the majors as a player and another 22 as a manager, Piniella made five trips to the World Series and has three championship rings.
Piniella began managing in 1986 with the Yankees and lasted three years, including a stint as general manager. He managed the Reds from 1990-92, leading them to a World Series championship in his first season. He also got national attention during his time there for a clubhouse wrestling match with reliever Rob Dibble, who downplayed the incident and said "we've been family ever since."
After Cincinnati, Piniella had a long run in Seattle, where his teams won at least 90 games four times and 116 in 2001. The three-time manager of the year also spent three seasons in Tampa Bay's dugout.
Some reporters asked Lou about the possibility of moving on to broadcasting. He said right now, the only thing he wants to concentrate on is getting home to spend time with his family.
(The Associated Press contributed to this report.)