The 61-year-old has led the central bank since January 2012 during a tumultuous time shaped by a string of crises and an almost constant battle against the appreciating Swiss franc.
"Having met the various challenges of recent years, now is the right time for me to step down," said Jordan in a statement.
Jordan joined the SNB in 1997 and became a member of its interest rate-setting governing board in May 2007.
He became chairman after his predecessor Philipp Hildebrand was forced to step down after his wife was involved in euro and dollar transactions.
"He did a superb job and will be very difficult to replace," said Karsten Junius, an economist at J.Safra Sarasin. "But maybe the end of his era is also a chance to broaden decision-making at the SNB."
In 2020, Jordan was reappointed by the Swiss government to remain as SNB chairman until 2027.
Seen by many as the epitome of a diligent technocrat, the Harvard-educated economics professor has also not been afraid to take big and sometimes unpopular decisions.
In 2015 the SNB upended currency markets by suddenly scrapping the minimum exchange rate against the euro, a move which sent the safe-haven currency soaring.
In recent years Jordan has overseen a successful attempt to combat inflation, with price rises in Switzerland significantly lower than in other parts of the world.
Last year he was involved in the SNB's provision of emergency liquidity to ease the takeover of Credit Suisse by UBS.
The SNB said in a statement it regretted Jordan's surprise decision.
"The Bank Council and the Governing Board greatly regret Thomas Jordan's decision, and express their sincere thanks for his many years of outstanding commitment," the SNB said.
Still, Jordan has come under fire for being late to react to the unfolding crisis at Credit Suisse, and also for being too dominant a voice in the SNB's decision making.
(Reporting by Dave Graham and John Revill; Editing by Miranda Murray and Jan Harvey)
By John Revill and Dave Graham
