Irish publishing group Independent News & Media
O'Brien, who owns nearly 22 percent of the group, has fought with management for years and been a vocal critic of management and O'Reilly, who succeeded his father in 2009.
O'Reilly, who will be replaced by chief operating officer Vincent Crowley with immediate effect, said wrangling with shareholders had become a distraction and he would leave the company with mixed emotions.
His departure brings to an end his family's 30-year control of Ireland's largest media company, which is heavily indebted.
The group has radically restructured over the past two years, selling flagship British title the Independent and interests in India, shutting loss-making newspapers in Ireland, and swapping debt for equity to secure its future.
Its shares closed up 6.6 percent at 0.2430 euro.
(Reporting by Lorraine Turner)