She notified President Obama in early March of her decision, according to the White House official. At that time, Sebelius told the president that she felt confident in the trajectory for enrollment and implementation of the Affordable Care Act, and that she believed that once open enrollment ended it would be the right time to transition the Department to new leadership.
"From her work on Head Start, to expanding mental health coverage, to advancing cutting-edge health care research and, of course, her unwavering leadership in implementing the Affordable Care Act, Secretary Sebelius often calls her work here the most meaningful of her life. As she closes this chapter, Secretary Sebelius is extremely thankful to President Obama and very proud of the historic accomplishments of this administration," an HHS official said.
President Obama will thank Secretary Sebelius for her service for the past five years at Friday's White House event, the official added.
Read MoreObamacare enrollment tally to surpass 7.5 million: US official
"Through the passage and implementation of the Affordable Care Act, Sebelius has overseen one of the most consequential initiatives of this administration; under her leadership, 7.5 million people have selected plans," the official said. "Sebelius has also fought to improve children's health, expand mental health care, reduce racial and ethnic disparities, bring us closer to the first AIDS-free generation, and promote women's health."
For Sebelius' replacement the official noted that President Obama sought a nominee with strong credentials in management, implementation and performance. "Sylvia Mathews Burwell brings just those skills," the official said.
"Defending the president's health-care law is a punishing assignment, and our committee has never hesitated to ask the tough questions of Secretary Sebelius and the other officials involved in its implementation. She may be finished in her role overseeing the law, but our efforts to get answers and relief for the American people will continue," House Energy and Commerce Committee Chairman Fred Upton said in a statement.
"Burwell is someone the president has relied on to navigate through the government shutdown in October, to jump-start his management agenda and bring the government into the 21st century, and help reach the two-year budget agreement the president signed into law," the White House official said.
"Having also worked in leadership positions at the Gates Foundation, the WalMart Foundation and Met Life, Burwell's combination of public and private sector experiences makes her the right person to steer HHS in the coming years," the official added.
"Burwell was confirmed unanimously by the Senate to lead the OMB less than a year ago, and has a record of building bipartisan consensus to get things done."
—By CNBC.com Staff