"I think the time has come for me to turn the reins of the committee over to the next generation of leadership, and I have decided that this next year is the natural time for me to relinquish the chairmanship," Thurmond, the longest-serving senator and oldest member of Congress ever, said in a written statement.
Thurmond had already said he will not seek elected office again after his Senate term expires in 2003, when he would be 101.
But word that Thurmond would step aside as committee chairman is sure to please other members of the panel, some of whom have wanted a younger lawmaker to take his place.
In his written statement, Thurmond said that before his reelection to the Senate last fall, he told senior committee members he would surrender the chairmanship after 1998.
Asked if colleagues were pushing him to step down, Thurmond said, "No pressure."
Thurmond's likely replacement would be Sen. John W. Warner (R-Va.), 70, who has built a deferential relationship with the chairman. Thurmond is seen as more conservative than Warner.