Sants has been CEO of the regulator since 2007 and after announcing his resignation in February 2010 was persuaded to stay on to reside over the change from the current system to the twin-peak model due to be implemented on 2 April.
Depending on processes within parliament, the FSA will be split formally into two new organisations some time in 2013 – the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).
Sants last day in the office will be 29 June at which point Andrew Bailey will take over his role as head of the Prudential Business Unit, the part of the FSA mirroring the future PRA and Martin Wheatley will remain head of the Conduct Business Unit (CBU) and future CEO of the FCA.
Following Sants departure both men will report directly to Lord Turner.
Sants said: "When I agreed to stay on as CEO in 2010, I committed to stay and deliver an orderly transition to the government’s new regulatory structure. The project is now firmly on track and with the establishment of twin peaks within the FSA I will have achieved that goal.
"Now is the right time to hand over to those who will deliver the long term goals of the future PRA and FCA."
Adair Turner, chairman of the FSA, said: "The major reforms made within the FSA since the financial crisis and progress in delivering the government’s plan would not have been possible without Hector. He is a truly outstanding public servant of great integrity and has provided the FSA with dedicated leadership and focus through extremely turbulent times.
"I am very sorry to see him leave but I understand his decision now that he has delivered what he set out to achieve. I’d like to thank him for all he has done."
Look out for our analysis on Sants and his turbulent time at the top of the FSA later today…