Volkswagen CEO Martin Winterkorn says he is stepping down “in the interests of the company” as it grapples with the emissions scandal.
Mr Wintekorn said in a statement: “Volkswagen needs a fresh start – also in terms of personnel. I am clearing the way for this fresh start with my resignation.”
He said he was acting in the interests of the company “even though I am not aware of any wrongdoing on my part”.
A successor has not yet been announced.
He said he was “convinced” that the company would “overcome this grave crisis”.
The Environmental Protection Agency (EPA) in the US said cars had been fitted with sophisticated software to switch engines to a cleaner mode when they are undergoing official emissions testing.
This is a type of software known as a “defeat device”. Once on the road, the cars produced nitrogen oxide pollutants at up to 40 times the legal standard.
Volkswagen will need to formulate a co-ordinated response as it faces deepening scrutiny.
New York attorney general Eric Schneiderman said he would collaborate with other US states to enforce consumer and environmental law.
Mr Schneiderman said: “No company should be allowed to evade our environmental laws or promise consumers a fake bill of goods.”
Other states are also looking at filing class action suits against the world’s biggest car-maker and, according to reports, the US Department of Justice (DoJ) is looking into the issue, which raises the possibility of the company and individual executives facing criminal charges.
In the past the DoJ has often extracted hefty payments from companies to settle criminal charges.