Solheim said in a statement that he had received the final report of the audit of his travel expenses on Saturday and that "after deep reflection" had chose to step down.
The Guardian had reported in September that Solheim had spent, according to a United Nations internal audit draft in just 22 months, which is nearly $ 500,000 (approximately 424.000 Euro) for airline tickets and hotel stays.
"Moments ago, with a heavy heart, I informed the Secretary-General (António Guterres) of my decision", he said on Tuesday.
Solheim, who reportedly claimed to have reimbursed some of the travel expenses, appeared optimistic and said he would continue to fight for environmental causes. It found that such travel "presents a reputation risk to the organization, especially [given] that UNEP is supposed to be the lead on sustainable environment matters".
In his statement, Solheim explained that he would remain committed to doing what he believes to be in the best interest of UN Environment.
Solheim told the Guardian he had already paid back money for instances of oversight and made changes where other rules had been broken.
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United Nations spokesman Stephane Dujarric confirmed that Secretary-General Antonio Guterres had accepted his resignation.
Dujarric described Solheim as having been "a leading voice in drawing the world's attention to critical environmental challenges, including plastics pollution and circularity; climate action; the rights of environmental defenders; biodiversity; and environmental security".
Published reports said Solheim was criticized for his extensive travels and a management style that prompted a few Scandinavian and other countries to withhold contributions to donor-funded UNEP until the criticism was answered.
Solheim emailed staff on Tuesday and said: "I wanted UN Environment to be a lead agency for reform, even if it raised some questions".
Guterres said that Deputy Executive Director Joyce Msuya will be acting director while a recruitment process is launched for a successor - a process that will include discussions with member states.
"It is my most honest hope that this proves to be in the best interest of UN Environment and the wider UN".
Solheim's resignation is effective Thursday, November 22.