The announcement came after Australia's Foreign Affairs Department confirmed that two Australians had been killed in the disaster.
Transport Minister Óscar Puente made the announcement on Tuesday at the end of an hours-long appearance before lawmakers about the crash - the second such deadly collision this year involving Spain's extensive high-speed rail network.
"A transport minister in a country like Spain cannot continue in his post after two accidents in less than a year," Puente told lawmakers.
"It's a question of political dignity, coherence and empathy with the victims."
The October 28 crash, which also left nearly 200 people injured, took place when a high-speed train slammed into another that had stopped on the tracks.
The chain of events that led to disaster started when the communication system key to the functioning of the security system on the Madrid-Seville line went down.
Central controllers in Madrid took over and gave the go-ahead for one train to proceed, even though there was a stationary train ahead.
It was the second major crash on the Madrid-Seville line in 2026.
In January, more than two hours further south along the route, a train derailed and struck another travelling in the opposite direction, killing 46 people. That crash remains under investigation.
The collisions have raised fresh concerns about the safety of the country's rail network and the most recent crash came four weeks before a national election.
Spain's high-speed rail network has been considered one of the country's crowning achievements. It is the world's second-largest, after China's.
Until 2026, it had not experienced a deadly crash since coming into service over three decades ago.
Earlier on Tuesday, Puente announced additional safety measures the government would implement on the rail network, including improving conditions in control centres and pushing for a faster rollout of the standardised European Rail Traffic Management System for safety and signalling.
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