Cpl Apiata will make "a great role model'' for at-risk children in his new role with a South Auckland trust, Prime Minister John Key said.
Mr Key told reporters Corporal Apiata had taken up a role at the High Wire Trust.
"It helps at-risk kids in South Auckland and Willie's going to be a great role model for them,'' he said.
"I'm sure he'll do a great job out there.''
Mr Key said it was "a shame'' to lose Corporal Apiata but his new role was a natural progression for him.
"It's a great loss I think to the SAS, but these guys are in a very high pressure environment. He's given a big part of his career to the army and obviously to the SAS, so we wish him all the very best.''
Cpl Apiata, a highly decorated member of the New Zealand Special Air Service (NZSAS), has been a soldier for 23 years.
Minister of Defence Jonathan Coleman said Apiata had decided to "move on to the next phase of his life".
"It's always time for reflection when someone leaves but people leave NZDF all the time," Dr Coleman said.
"He's given great service to New Zealand, and his [Victoria Cross] speaks for itself. It's a real credit to him but also to the SAS and I think we can be very proud of all he and the unit have achieved over a long period of time."
Asked why Apiata planned to leave the Defence Force, Dr Coleman said: "He has been in the SAS for 10 years now, I would assume that he's just decided that it's time to do something else with his life."
New Zealand Defence Force chief Lieutenant General Rhys Jones said Cpl Apiata was leaving to pursue a job in the private sector.
Cpl Apiata told the NZDF about his decision to leave several months ago, Lt Gen Jones said.
He said Cpl Apiata earned his Victoria Cross of New Zealand award with his gallant efforts to save a wounded comrade under fire.
"Corporal Apiata has worked extremely hard to discharge his new responsibilities as a public figure, while also maintaining his role as a member of the New Zealand Special Air Service Regiment.
"The NZ Defence Force thanks Corporal Apiata for his significant contribution and wishes him well with his future career."
Cpl Apiata, from the eastern Bay of Plenty town of Te Kaha, is the only living New Zealander with a Victoria Cross.
Only 13 living people have received the award.
He was issued the award for his bravery rescuing an injured fellow soldier under enemy fire while both were serving with the Special Air Service (SAS) in Afghanistan in 2004.
His citation read: "In total disregard of his own safety, Lance Corporal Apiata stood up and lifted his comrade bodily.
"He then carried him across the 70 metres of broken, rocky and fire swept ground, fully exposed in the glare of battle to heavy enemy fire and into the face of returning fire from his main troop position.
"Having delivered his wounded companion to relative shelter with the remainder of the patrol, Lance Corporal Apiata re-armed himself and rejoined the fight in counter-attack."
Cpl Apiata was given the Victoria Cross in a ceremony at Government House in Wellington on July 26, 2007.
