Richard Jeffrey, 44, who took on the role in May 2009, will step down from the project, which is behind schedule and over budget, on 8 June.
The news follows a dispute between Tie and its contractors Bilfinger Berger, which halted work on the ?545m project.
The previous chief executive, Willie Gallagher, also resigned after two years in the role.
Mr Jeffrey was previously the managing director of Edinburgh Airport.
'Optimum time'Last week a report published by Edinburgh City Council said work so far had cost ?440m, out of a total budget of ?545m for the scheme.
The report also confirmed up to 10 of Edinburgh's unused tram vehicles could be leased to Transport for London to be used on the Croydon Tram Network.
Officials said they would not be needed in Edinburgh for "several years".
Following completion of mediation over the controversial project, Edinburgh City Council announced last week it was to close Princes Street from July until next spring to allow works on the tram line to be repaired.
Mr Jeffrey said: "Following the mediation earlier this year I believe now is the optimum time to move on and allow the project to proceed to the next stage.
"I remain convinced that trams are part of the solution for future generations, and I look forward to travelling on the city's trams.
"I would like to pay tribute to my board, partners, stakeholders and my colleagues, whose support, dedication and commitment in trying circumstances has been fantastic."
Vic Emery, Tie chairman, said: "Richard has been an energetic force during his time on the project and has seen the organisation through a particularly challenging period."I would personally like to pay tribute to his determination, integrity and resilience during his time here with Tie.
"The organisation will continue as before for the current time. We are working closely with Edinburgh City Council and there is a great deal of work ongoing in terms of moving forward the different work streams agreed from the mediation in March."
Gordon Mackenzie, Edinburgh City Council's transport convenor, said: "I am grateful for the energy and focus Richard has given to Tie and the tram project.
"He has worked tirelessly for the city in very difficult circumstances and as a unique individual, much respected in the business community and amongst partners, I wish him the very best in his career."
Project 'stalled'SNP MSPs for the city of Edinburgh welcomed the resignation.
Colin Keir, who represents Edinburgh West, said: "Richard Jeffrey was supposed to turn the tram project around and instead it simply stalled.
"There are tough decisions to be made about the tram project and the future of Tie. It is right that those responsible for the problems of the last few years remove themselves from the future of the organisation."
Mr Jeffrey is a chartered civil engineer and has a first class degree in civil engineering from Imperial College, London.
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