Juergen Klinsmann, who led Germany to a surprise third-place finish in the World Cup, said on Wednesday he is stepping down and that assistant Joachim Loew would take his place.
"This was not an easy decision," Klinsmann, fighting back tears, told a news conference in Frankfurt.
"I would like to thank everybody for two exciting, two wonderful years," the 41-year-old said.
Klinsmann, who came under fierce criticism prior to the World Cup over his commitment and tactics, silenced the doubters by steering Germany to the semi-finals, where they lost to eventual world champions Italy in extra time.
He said he is leaving because he wanted to spend time with his family, who live in southern California, and plans to take a six-month break before thinking about his next move.
"I feel burned out," Klinsmann said.
Loew, a former midfielder and Bundesliga coach who worked closely with Klinsmann in taking Germany further in the World Cup than many had expected, has agreed on a two-year contract to run the team.
The 46-year-old pledged to continue with the philosophy that he and Klinsmann put in place over the past two years.
"That's the only way we can achieve a lasting place among the very best in the world," Loew said.
All 23 players in Germany's squad, 93 percent of the public, according to opinion polls, and even some of Klinsmann's harshest critics had said they wanted him to continue.
Germany have a friendly against Sweden on August 16 before their 2008 European Championship qualifying campaign starts in September.
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