Japanese Prime Minister Yukio Hatoyama and his cabinet stepped down Friday morning prior to the Diet's planned afternoon vote on a new head of government, Xinhua reported.
Hatoyama announced his resignation Wednesday, only eight months after taking office, as calls for him to resign grew within the DPJ ahead of an upper house election in July.
His flip-flop in policy on the issue of a US military base on Okinawa helped erode his popularity, analysts said.
Finance Minister Naoto Kan, who was also deputy prime minister, is seen as a possible successor.
The DPJ is to hold a general meeting to decide on the next leader Friday. The selection is tantamount to picking a prime minister, as the party has a majority in the more powerful lower house, which chooses the prime minister.
The DPJ won a landslide victory in the August general election, ending more than a half-century of almost uninterrupted rule by the Liberal Democratic Party.