Previously one of the Liberal government's most senior ministers, Ms Bishop has resigned well before her tenure was due to end after a tumultuous period marred by job cuts, bullying allegations and ugly disputes between staff and university management.
The disputes have tarnished the reputation of the ANU, which is ranked as the 32nd top university worldwide and Australia's fourth best, according to the federal government.
In an email to staff, the ANU council said it was committed to providing new leadership after some challenging years.
"Recent years have seen significant turmoil in the governance of the university," the council said.
"We need to rebuild trust and confidence with our thousands of staff, students and alumni and with the ACT and Australian communities."
The university also needed to regain the confidence of the universities regulator, the education minister and the Australian parliament, the council said.
Pro-Chancellor Larry Marshall will take over Ms Bishop's role before a permanent chancellor can be chosen.
Staff had suffered enormously during Ms Bishop's "disastrous" reign, National Tertiary Education Union president Alison Barnes said in a statement.
"Julie Bishop falling on her sword is long overdue and closes one of the darkest chapters we've seen at any Australian university," she said.
A contentious cost-cutting proposal, which would have made hundreds of staff forcibly redundant, was abandoned when Vice-Chancellor Genevieve Bell quit her post in late 2025.
At the time, Ms Bishop said she had the full confidence of the university council and intended to serve out the rest of her term until the end of 2026.
It's unclear why Ms Bishop chose to step down early, but the Australian Financial Review reported she believed the universities regulator, which had intervened in the running of the ANU council, had overreached.
The university must now work openly with staff, students and the broader community to rebuild confidence, ACT senator and senior minister Katy Gallagher said.
"I note the resignation of ANU Chancellor Julie Bishop," she said in a statement.
"The challenges facing ANU did not arise overnight, and rebuilding trust and confidence across the university community will take time and careful work."
The hard work of students, academics and alumni had forced the university's leaders to take responsibility for governance and leadership failures, independent ACT Senator David Pocock said in a statement.
"In stepping aside, the chancellor is acting in the best interests of the ANU," he said.
"When things go so terribly wrong at the helm of such an important institution, especially one governed by Commonwealth law, there must be accountability."
