HSE chief executive Cathal Magee is set to step down from his €300,000 a year job after less than two years in the post.
His decision comes as the Government announces sweeping changes in the HSE and new management structures.
The existing structure will be replaced by a system of directors with a new director general to run the organisation.
Mr Magee was appointed in September 2010.
He has been highly regarded as an administrator but tensions have grown within the organisation in recent months as the financial position deteriorated.
The HSE is now running €281m over budget.
This is expected to spiral to more than €500m by the end of the year.
Mr Magee, who it is understood will be paid for the full term of is contract, has argued that the financial deficit of the HSE is not the fault of the organisation.
He has blamed the Department of Health for failing to introduce laws to allow an extra €140m to be generated in revenue from health insurers, and the failure to agree a promised new deal with the pharmaceutical industry to deliver more than €100m in savings.
These issues combined with a larger number of staff leaving the organisation in recent months than expected.
Last week it emerged that the Government will have to cut health spending over the next two months to fulfil a new commitment it has given under the terms of the Troika bailout.
The Programme for Government promised to abolish the Health Service Executive and replace it with new structures.
Shortly after his appointment as Health Minister, Dr James Reilly replaced the HSE Board.
Under the new reforms announced today, the management structure will now have new directorates for various divisions.
These will be overseen by a director general.
The Government's plans to reign in health spending with new cuts are due to be finalised by September.
Dr Reilly recently appointed a consultant from the United Kingdom to examine the capacity of the HSE to manage its €13bn budget.
Mr Magee's departure is the latest in a line of similar moves in the whole health administrative area.
In March of last year, the Minister removed the politically appointed board of the HSE.
Two months later Jimmy Tolan, chief executive of the State-owned health insurer VHI, stepped down following reported disagreements with the minister over plans to break up the company.
Several weeks ago the chairman of the VHI, Bernard Collins, announced he was leaving his post at the end of the summer.
Earlier this year the secretary general of the Department of Health, Michael Scanlan announced his email@example.com