The resignation of Prime Minister Benjamin Netanyahu’s powerful cabinet partner came barely five weeks before the country’s national elections, slated for Jan. 22.
“I am not legally bound to submit my resignation but I have decided to step down from my duties as Foreign Minister and deputy premier,” Lieberman said in a statement that rejected the prosecution’s charges.
He expressed the hope that he would be able to clear his name before the elections, allowing him to contest as previously planned.
“Following 16 years of investigation I will now be able to end this matter quickly and without delays, and finally clear my name,” he said.
"I am doing this because I am convinced that Israel's citizens should be able to go to the polls after this matter has been settled... and I can continue to serve the state of Israel and Israel's citizens as part of a strong united leadership," he said.
Lieberman is the leader of Yisrael Beitenu, the second largest party in Netanyahu's Likud-led coalition government.
Senior party officials from the ruling coalition said Lieberman would remain number two on the joint ticket and would still run in the elections, Haaretz reported.
Lieberman’s spokesman Tzachi Moshe said the leader was not resigning from the party list, meaning he was still running for Knesset, the Associated Press reported.
Attorney General Yehuda Weinstein Thursday said he was closing the main case against Lieberman that relates to the allegations that he illicitly received millions of dollars from businessmen and laundered the cash through straw companies in Eastern Europe while he was a lawmaker and cabinet minister.
But Weinstein added that he would indict Lieberman on lesser charges of fraud and breach of trust, in the case concerning Israel's former ambassador to Belarus. Lieberman is alleged to have received official material about the investigation against him from the former Israeli ambassador to Belarus.
The indictment of the charismatic, ultra-nationalist and hawkish leader who has been touted as Netanyahu’s heir is thought to be a blow to the ruling coalition’s electoral appeal.
On Wednesday, Lieberman had created a controversy saying many world leaders would sacrifice Israel to radical Islam just as Europe appeased the Nazis before World War II.