The decision underscores a growing divide between the outspoken tech industry conservative and Silicon Valley.
Thiel has also considered resigning from the Facebook board, sources familiar with his thinking said, according to the Journal. His motivation reportedly stems from a perception of the valley's intolerance for right-leaning politics as well as concerns around the financial impacts of regulatory scrutiny on the tech industry.
The billionaire investor is expected to stay on the board in the near term, while investment firms Thiel Capital and Thiel Foundation will relocate to Los Angeles later this year, according to the report.
Thiel's representatives did not respond to CNBC's request for comment.
Allegations of political bias threw Facebook into the center of a fierce national debate during the 2016 election. A recent Wired profile of Facebook detailed how the platform's Trending Topics team became a lightning rod of criticism over the perception that it suppressed conservative views.
Thiel, a libertarian who supported and later advised President Donald Trump, received criticism from other Silicon Valley moguls, including Netflix CEO Reed Hastings. Hastings also serves on the Facebook board.