Pita Limjaroenrat, whose reformist party won the most seats at Thailand's national elections in May, resigned as its leader on Friday.
The young challenger led the Move Forward Party (MFP) to the top spot in the polls, capitalising on a swell of voters disenchanted at a near-decade of junta-backed rule, before he was blocked by conservatives and suspended as an MP.
The MFP left a partnership with opposition rivals Pheu Thai, who went on to form a coalition government with pro-military parties, and said they would go into opposition.
"I resigned as the MFP's party leader to pave the way for an MP that is able to have a voice in parliament, be the opposition leader," Pita wrote on his official Facebook page.
Under current rules, the leader of the opposition must be an MP.
"Due to my MP suspension, I won't be able to get my MP position and be opposition leader in the near future," Pita wrote.
He was suspended in July while waiting for the Constitutional Court's ruling over his ownership of shares in a now-defunct media company.
MPs are prohibited from owning media shares, under the Thai constitution.
Pita emphasised the importance of the role, writing that it was like "the prow (of a ship) that determines the direction of the opposition".
"There will need to be a party general meeting to vote for the new leader," MFP lawmaker Rangsiman Rome told AFP, but did not specify when.
- 'The real deal' –
The 43-year-old has faced a barrage of challenges, both political and legal, thrown against him since the MFP's shock success in the May polls.
He dropped out of the premiership race after his first bid faltered at the hands of the junta-appointed Senate, and his second chance was denied by parliamentarians.
Conservative lawmakers were spooked by Pita and the MFP's success and their determination to reform the kingdom's strict royal defamation laws.
Outside parliament, the Constitutional Court is also considering a second case alleging that the MFP's campaign promise to amend Thailand's royal defamation law is tantamount to a plan to "overthrow" the monarchy.
It is unclear when the court will rule on either case, but Pita faces disqualification from parliament and even a possible jail term should he face a criminal investigation.
Pita said in his Facebook post that he would remain closely involved, "no matter his role".
Urging supporters to gather on September 24 in central Bangkok, he said he would continue to work with the MFP "so that we could achieve something together".
Political analyst Thitinan Pongsudhirak said Pita's decision, following his spectacular run as leader, showed the party was the "real deal".
"It is not about personalities but about policy reforms and the modernisation of Thailand," he told AFP.
Stepping aside, he said, enabled the MFP to move on and pursue its reform agenda as an effective opposition.
The Constitutional Court has intervened in politics before, disqualifying the billionaire leader of the MFP's predecessor party, Thanathorn Juangroongruangkit, as an MP in 2019.