Prime Minister Rafik Hariri resigned Wednesday, dissolved his Cabinet and said he wouldn't lead Lebanon's next government.
President Emile Lahoud accepted the Cabinet's resignation and asked Hariri to continue in a caretaker capacity until a new Cabinet is formed.
The two reportedly had been discussing the formation of a new government for two weeks but apparently failed to bridge their differences.
Hariri has held his post for 10 of the 14 years since the end of Lebanon's civil war in 1990.
In September, the parliament defied a United Nations resolution and approved a Syrian-backed measure to extend Lahoud's six-year term by three years.
Hariri initially opposed the extension but ultimately sided with the pro-Syrian president.
Since then, many have expected Hariri to dissolve the Cabinet as a formality before the start of Lahoud's new term in late November, but few expected him to step down.
Syria sent troops to Lebanon in 1976 to help quell a sectarian civil war but plunged into the conflict, emerging as the undisputed power broker after the war ended. It has a strong say in appointments and candidates and has frequently mediated political feuds.