Barclays chief executive Bob Diamond has resigned with immediate effect.
The move comes less than a week after the bank was fined a record amount for trying to manipulate inter-bank lending rates.
Mr Diamond said he was stepping down because the external pressure on the bank risked "damaging the franchise".
Chairman Marcus Agius, who said on Monday he was stepping down, will take over the running of Barclays until a replacement is found.
"I am deeply disappointed that the impression created by the events announced last week about what Barclays and its people stand for could not be further from the truth," Mr Diamond said in a statement.
He will still appear before MPs on the Treasury Committee to answer questions about the Libor affair on Wednesday.
"I look forward to fulfilling my obligation to contribute to the Treasury Committee's enquiries related to the settlements that Barclays announced last week without my leadership in question," Mr Diamond said.
The Chief Secretary to the Treasury, Danny Alexander, told BBC News that Mr Diamond's resignation was "the right decision".
"There are many questions to be answered about the rate fixing and Barclays will have to answer many of those questions," said Mr Alexander.
"This is the right decision. Responsibility has been taken in the right way. Hopefully this will help Barclays to establish the right culture in the future."
Last week, regulators in the US and UK fined Barclays £290m ($450m) for attempting to rig Libor and Euribor, the interest rates at which banks lend to each other, which underpin trillions of pounds worth of financial transactions.
Staff did this over a number of years, trying to raise them for profit and then, during the financial crisis, lowering them to hide the level to which Barclays was under financial stress.
Prime Minister David Cameron, who has launched an inquiry into banking standards, has described the rigging of Libor rates as "a scandal".
The Serious Fraud Office is also considering whether to bring criminal charges.
After Mr Agius announced his resignation on Monday, politicians and shareholders continued to call for the chief executive's resignation.
"Bob Diamond has made an enormous contribution to Barclays over the last 16 years of distinguished service to the Group, building Barclays Investment Bank into one of the leading global investment banks in the world," said Marcus Agius.
"As chief executive he has led the bank superbly," Mr Agius said.