Mr. Castellani said he would submit his resignation at a board meeting later this month.
The announcement comes after the Italian government nominated former culture ministry undersecretary and Italian Olympic Committee head Mario Pescante as overall supervisor of the Games.
In a statement, Mr. Castellani said that the powers given to Mr. Pescante represent a lack of confidence in the work done by the Turin Olympic Organizing Committee until now and the capacity to continue it.
Mr. Castellani has had to fight off reports that the Turin Games would fail because of transportation and accommodation problems. Last week, the head of the International Ski Federation said Turin was 4,000 rooms short of the number needed and transportation problems could force some fans to travel several hours to events.
Some information provided by AP and AFP.