Debbie Wasserman Schultz quit a few days after the publication of 19,000 hacked emails appeared to show an insider effort to destroy Bernie Sanders’ presidential campaign.
The emails, posted on Wikileaks, include two messages revealing plans to present Mr Sanders as an atheist in deeply-religious states.
The 74-year-old Vermont senator, who describes himself as a democratic socialist, was eliminated from the race in June and, earlier this month, pledged his support for Mrs Clinton.
Mr Sanders was among those who had called for Ms Wasserman Schultz to step down, something she agreed to on Sunday.
In response, he said the mother of three had “made the right decision for the future of the Democratic Party” but he refused to make another bid for the nomination, telling NBC: “We’ve got to elect secretary Clinton”.
He called for new leadership that would “always remain impartial in the presidential nominating process, something which did not occur in the 2016 race”.
Ms Wasserman Schultz – who described Mrs Clinton as “a friend I have always believed in and know will be a great president” – will step down at the end of the convention.
It is a spectacular fall from grace for the tough-talking Florida representative, who became the first woman elected to chair the Democratic National Committee.
Two other women have served in the role but they were appointed, not elected.
The resignation is also a blow to a party that was hoping to represent itself as united at the event.
Thousands of delegates are expected to watch as Hillary Clinton is confirmed as the party’s nominee to challenge the Republicans’ Donald Trump in November’s election.
Mr Sanders and First Lady Michelle Obama are to speak on the first day of the convention, which begins at 9pm Monday, UK time.
Former president Bill Clinton is the star on Tuesday, while President Barack Obama and Vice President Joe Biden take the stage on Wednesday.
Meanwhile, Democrats are bracing themselves for further scandal, with more emails expected to be released in the coming days.
DNC interim chair Donna Brazile told CNN: “I don’t know the substance but I do know there are lots of stuff that we might have to apologise for and that’s why I say you got to own it, take full responsibility and work with the staff to create a different culture at the DNC.”
Mrs Clinton’s campaign manager, Robby Mook, told ABC that Russia was behind the email leaks in an effort to help Mr Trump win the presidency, something he described as “troubling”.
Mr Trump, who has boasted that he can capture the support of disaffected Sanders voters, described Ms Wasserman Schultz as “over-rated”, adding: “The Dems convention is cracking up”.
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