Alaska Gov. Sarah Palin to Resign on July 26

"We know we can effect positive change outside government at this moment in time on another scale and actually make a difference for our priorities," Palin said in a news conference alongside a lake in her hometown of Wasilla, Alaska.

Using a basketball analogy, Palin said, "I know when it's time to pass the ball for victory."

Palin, 45, is a major star in the GOP and is seen as a leading candidate for the party's presidential nomination in 2012. Her decision not to run for reelection in 2010 and to leave office imminently came as a shock to Republican strategists today.

"We've seen a lot of nutty behavior from governors and Republican leaders in the last three months, but this one is at the top of that," said John Weaver, a longtime friend and confidant of  Sen. John McCain (R-Ariz.), the party's presidential nominee in 2008 whose of selection of Palin catapulted the first-term Alaska governor to national prominence.

Alaska Lt. Gov. Sean Parnell (R), who will succeed Palin, appeared with Palin and complimented her service to the state.