Labor Secretary Hilda Solis resigned her post on Wednesday, saying she plans to return to her native California. She is expected to run for a seat on the Los Angeles County Board of Supervisors.
In a message to colleagues, Solis said she made the decision to leave after discussing it with her family and close friends.
One of the highest-ranking Hispanics in Obama's administration, Solis has won praise from labor unions for aggressive enforcement of wage and hour laws and job safety regulations. But business groups have criticized her as not taking a more cooperative approach.
"Leaving the department is one of the most difficult decisions I have ever made, because I have taken our mission to heart," Solis said. "As the daughter of parents who worked in factories, paid their union dues and achieved their goal of a middle-class life, and as the first Latina to head a major federal agency, it has been an incredible honor to serve."
President Barack Obama called Solis "a tireless champion for working families."
"Over the last four years, Secretary Solis has been a critical member of my economic team as we have worked to recover from the worst economic downturn since the Great Depression and strengthen the economy for the middle class," Obama said in a statement.
Solis said she is proud that 1.7 million people have completed federally funded job training programs under her tenure. Her agency oversaw the spending of about $67 billion for unemployment insurance benefits, job training and other job placement and worker protection programs under Obama's economic stimulus package.
Separately, the White House said Wednesday that Attorney General Eric Holder, Health and Human Services Secretary Kathleen Sebelius and Veterans Affairs Secretary Eric Shinseki would remain in their posts.
Holder and Sebelius have been frequent targets of Republican foes in Congress. The attorney general has been criticized for the government's handling of Operation Fast and Furious, a gun-running investigation gone awry. Sebelius is in charge of putting in place Obama's health care overhaul law, which Republicans have failed to repeal.
Associated Press writer Ricardo Alonso-Zaldivar contributed to this report.