Bailey, who during his seven years at The FA has variously managed and led the regulatory, legal, disciplinary, refereeing and professional game services functions, will step down in March 2017.
He said: "I have very much enjoyed working at The FA and I take particular pride in the fantastic team I have been able to build. That team has made significant progress and I am sure will continue to do so.
"However, having previously spent seven years in a specialist sports law practice role, as well as similar periods in international rugby and now English football, it is time for a fresh challenge.”
Over the coming months, in addition to providing a smooth transition and handover, of his various responsibilities, Bailey will undertake and coordinate a review of the regulatory and disciplinary framework of English football with a view to making recommendations on further potential enhancements.
He added: "I am delighted to have been asked to build on the significant progress already made over recent years in the speed, transparency, consistency and media visibility of English football's regulatory and disciplinary processes and decisions.
"Working in consultation with the game during the review we will look to identify ways to further evolve relevant practices and procedures in order to continue to meet the future demands of the modern game and the wider football public."
FA chief executive Martin Glenn said: “While I am sorry to see him go, I fully respect Darren’s decision and would like to pay tribute to him for the contribution he has made during his time at Wembley.
"He has played a significant role in shaping a key area of The FA’s work and is highly respected across the wider sports industry. I am also very pleased Darren will continue to play a prominent part over the coming months as we look to review some important aspects of our approach to football governance.”