Jan du Plessis, Chairman of BT said: "Gavin has been with BT for just over 14 years and I want to thank him for his contribution to our business during that time, in particular during the nearly five years that he has served as Chief Executive".
His decision to exit BT follows last month's announcement that the group would cut 13,000 jobs in a bid to deliver cost savings.
Since taking the job back in the autumn of 2013, Patterson has been investing in building up BT's mobile and TV businesses.
Shareholder confidence has followed the share price down, and with BT embarking on a crucial restructure, the board has decided it's time for a change.
Mr Patterson has been at BT for 14 years, 10 of those as a board member.
But a failure to hit a revenue target and a forecast for flat profits for the next couple of years sent its shares down to near six-year lows.
"BT is a great business and, with the new management team I've recently put in place, is, I believe, very well positioned to thrive in the future", he said.
"There's a been more wrong than right for BT since he took over five year ago".
Deutsche Telekom, BT's largest shareholder with a 12 per cent stake, has grown increasingly dissatisfied with Mr Patterson's performance over the past year, partly because of blunders like an accounting scandal in Italy, according to a person familiar with the situation.
"While the markets are likely to receive the news positively (.) it does beg the question as to why the transition was announced after the company launched a fundamental transformation programme flanked by a reorganization of the management structure with new appointees", they said.