Prof Murdoch has been on sick leave since March this year, with Prof Helen Nicholson running the financially-battered university in his absence.
She will continue as acting vice-chancellor until a permanent replacement is found after a "global search", the university said in a statement.
Prof Murdoch had recovered fully and will return to the university's Christchurch campus to resume a position as a distinguished professor.
“I am deeply thankful for all the support I received while I was ill recently. I am very pleased to share that I have made a full recovery but the time away has prompted my wife, Lynley, and I to reflect on our future direction,” Prof Murdoch said.
“This led to the difficult decision to take up new opportunities and to undertake a different pathway at this time."
During his absence the university has been grappling with a $60 million financial storm as staff are confronted with impending cuts that could lead to several hundred job losses.
Staff and students have marched in protest through the campus and this week called for an independent review of the university’s financial management.
Prof Murdoch, the former head of the university’s Christchurch campus, took over in February 2022 from Prof Harlene Hayne who stepped down after 10 years in role.
Soon after he began his tenure in February 2022, he emailed staff saying creating change would be his "highest priority" in the wake of a brutal review of allegations of racism at the School of Physical Education, Sport and Exercise Sciences.
The university has since embarked on a high-profile proposal to change its logo with the traditional coat of arms replaced by a tohu (symbol) and a new Māori name for the institution.
Chancellor Stephen Higgs thanked Prof Murdoch for his contribution.
“David is one of New Zealand’s foremost experts in infectious diseases and we are delighted that he will be able to continue to contribute to this important field and others in his capacity as distinguished professor.
“We wish to thank David for his service to the University of Otago during his time as Vice-Chancellor. David has progressed a number of important strategic initiatives, including our overarching strategic plan, the Compass culture change project, and key reviews of employment-related processes and Health Sciences,” he said.
Prof Murdoch reflected on key areas of progress made during his tenure: “The university has made progress towards becoming Te Tiriti-led. Aligning the key strategic initiatives progressed over the past year provides an unprecedented opportunity to guide our university’s future."
