Blessing, who has been CEO since May 2008, will see out his current contract, which runs until the end of October 2016, but did not accept an offer to extend it beyond that, Commerzbank said in a statement.
"I deeply regret this decision and was hopeful that we could extend the contract," Supervisory Board Chairman Klaus-Peter Mueller said.
Blessing, a University of Chicago graduate and former McKinsey consultant who comes from a family of bankers, has restored to health Germany's second biggest bank by market value since the financial crisis.
The bank ran into trouble after taking over Dresdner Bank in the midst of the financial crisis. The state had to bail the bank out with more than 18 billion euros in funds, much of which has now been repaid.
Commerzbank said in August it planned to pay a dividend for 2015, which would be its first since 2007. Under Blessing's direction, the bank, which finances more than a third of the country's exports, has cut costs and shrunk its balance sheet by exiting shipping and commercial property loans, among others.
Blessing, who had recently skirted questions on his future, said in a statement on Sunday that he felt 2016 was a good time for someone else to take over the running of the bank, a household name in Germany.
"We have overcome the major challenges of the financial crisis or will do so in the coming months. We are also clearly on track to reclaiming our position as a sustainably successful bank," he said.
It is not clear who will succeed Blessing. Commerzbank does not have a deputy CEO on its board.
The German government owns just over 15 percent of Commerzbank via the bank rescue fund Soffin. A Finance Ministry spokesman declined to comment on the announcement on Sunday.
Commerzbank is due to report third-quarter results on Monday.
(Reporting by Victoria Bryan and Alexander Huebner; Additional reporting by Paul Carrel; Editing by Ralph Boulton)
