Sir Ian, 65, was heavily criticised for the Network Rail engineering overruns at the last new year which resulted in travel chaos for thousands of passengers.
The rail operator was fined a record £14 million by the Office of Rail Regulation for the overruns, the worst of which was at Rugby on the busy London to Scotland East Coast Main Line.
Network Rail said he would be stepping down from its board following the not-for-dividend company's annual meeting next July. He will stay with the company until a successor is found.
Network Rail's group finance director Ron Henderson has also said he is going to retire.
Sir Ian has been with the rail operator since it took over in 2002 from the ill-fated Railtrack which was put into administration.
He said today: "Network Rail has delivered substantial improvements in the safety, reliability and efficiency of the railway over the past six years.
"Safety is at record levels, train punctuality is now above 90 per cent, and we are on track to reduce cost by around 30 per cent by the next annual general meeting. I have led the board for over six years now and a great deal has been achieved in that time.
"As the company enters a new phase in its development, it is entirely appropriate that a new chairman helps take the company forward.
"The next challenge is for NR to help deliver an expanded and enhanced railway to meet the growing demand from passenger and freight customers. My role now will be to help find a replacement and see through a smooth transition."
Mr Henderson will stay with the company for the next few months to ensure a smooth hand-over to his replacement, who will be announced shortly.
Two weeks ago the company, which has responsibility for maintaining track, signalling and stations, announced the strengthening of its board with the appointment of three new executive directors.
Sir Ian said: "The last six years have been a period of tremendous change. Delivering a safer and better railway for passengers and freight users has been central to everything we have sought to achieve.
"Much has been done, and significant improvements made, but my successor will still have much left to achieve as Network Rail seeks to address the future challenges facing the railway."