The 61-year-old has had an eventful leadership, attracting both praise and criticism since he joined the retailer in 2004.
Sir Stuart was revered for steering the firm to profits of 1bn in 2008, but was vilified for taking on the dual role of chairman and chief executive, and over excessive boardroom pay.
Former City banker Robert Swannell, who was a lead adviser to M&S in the defence against retail tycoon Sir Philip Green's takeover bid in 2004, will replace Sir Stuart as chairman, while former Morrisons boss Marc Bolland continues as chief executive, after joining the firm in May.
Sir Stuart will take on an advisory role at private equity firm Bridgepoint after his departure.
He brought in key talent to drive a revival of M&S clothing ranges after taking up the helm and commissioned advertising campaigns, featuring the likes of supermodels Twiggy, Erin O'Connor and singer Myleene Klass.
But his role, combining chairman and chief executive, raised the ire of many investors as it breached corporate best practice.
M&S's rocky ride under his leadership can be tracked by its share price – which lifted from the 277p he inherited to 759p in 2007, before the downturn chopped it back to 369p last Friday.
Sir Stuart's own M&S journey started in 1972 when he began his retail career as a management trainee.
Following his "apprenticeship" at M&S, he worked with a number of high-profile retailers including the Burton Group, Debenhams and Dorothy Perkins.
But it was when he joined Arcadia as chief executive in November 2000 that he cemented his reputation as a major player by turning around the company, which was lumbered with more than 250m debt when he joined.
Sir Stuart presided over the sale of Arcadia to Sir Philip Green for 855m in 2002, making 25m out of the deal himself.
His replacement Mr Swannell, is former vice-chairman of US bank Citigroup's European operations. His career has seen him work on a long line of tough corporate battles, including spirits producer Pernod Ricard's acquisition of Irish Distillers and acting for P&O Princess when it was taken over by Carnival.
Mr Swannell takes up the helm at an uncertain time for retailers. Today's VAT rise, forthcoming public sector spending cuts, recent poor weather and rising commodity prices have all rocked confidence in the sector's outlook.