Johnson was in his second full season in the position for the Lakers, who are 37-44 and will be sitting out the playoffs.
The Lakers website says Johnson and General Manager Rob Pelinka are responsible for all basketball-related decisions. That included firing and hiring coaches and signing players to contracts.
The Lakers released a statement following Johnson’s announcement. The team said it was “deeply grateful to Magic” for all he has done as “a player, an ambassador and an executive.”
The Lakers will work “in a measured and methodical fashion to make the right moves for the future of our organization,” the statement said.
“We thank (Johnson) for his work these past two years as our President of Basketball Operations and wish him, Cookie, Andre, EJ and Elisa all the best with their next steps,” the statement said. “He will always be not only a Lakers icon, but our family.”
Johnson returned to the Lakers on February 2, 2017, to advise ownership on basketball and business. He wasted no time on saying what his intentions were and he was put in charge weeks later.
Walton is 98-147 as coach of the Lakers, who have not had a postseason game since 2013.
Johnson said Tuesday he had more fun as a mentor to players, as a big brother figure. He said he couldn’t do that in his business role.
He appeared to hint that he would have had to fire Walton on Wednesday, and it pushed him toward stepping down.
“Tomorrow I would have to affect somebody’s livelihood and their life,” he said. “That’s not fun for me. That’s not who I am.”
He complained about back-stabbing and whispering.
“I don’t like a lot of things that went on that didn’t have to go on,” he said.
CNN’s Jill Martin contributed to this report.