"After more than one attempt to surrender the microphone, the time is right," Smith said.
"I've been at this one microphone for longer than I would ever have thought. It's been a privilege and pleasure and my gratitude goes to a very loyal audience. But there is a still a year to go," he said.
"I have loved this job. I continue to love this ... it's not a job," he told his listeners this morning.
"I have enjoyed it thoroughly.
"Coming in here five days a week has been fun ... but like I said everything changes."
NZX-listed NZME owns Newstalk ZB and the company's head of talk Jason Winstanley said Smith was "without question one of the most magnificent broadcasters New Zealand has ever seen".
"He has kept his loyal audience abreast of the news, the opinions and the analysis, each and every day. He always leads the agenda. We will miss his intelligence, his wit and, most of all, his incredible voice each morning."
Smith has worked alongside his producer, now wife, Carolyn Leaney for the past 30 years.
Winstanley said there were exciting projects coming up with Smith and Leaney within NZME.
"Newstalk ZB has always been home to the best talent in the business. And our new morning host is no exception. I am delighted to announce that Kerre McIvor will take over from Leighton Smith in 2019. Kerre is a sensational broadcaster and we can't wait for her sharp, no-holds-barred approach to hit morning talk."
McIvor will step back as afternoon co-host at the end of this year. Andrew Dickens will step into that slot until Barnett takes over in early 2019.
Winstanley said McIvor would return to hosting Sunday mornings until she takes over the weekday morning show in 2019.
"As we've revealed today, Newstalk ZB's future is very bright, with a fresh and dynamic mix of exciting talent on the air for years to come," Winstanley said.