Mrs Leadsom said she "no longer believed" that the government's Brexit approach "could deliver on the referendum result".
But what does this mean for the Prime Minister, and when is she likely to stand down?
Will Theresa May survive?
Even the most optimistic onlookers will conclude that Theresa May's premiership is entering its final weeks, if not days.
She looks set to cling on through Thursday's European elections, but could set out the timetable for the contest to replace her sooner than previously expected.
Her meeting with Sir Graham Brady, the representative of Tory backbench MPs, on Friday will likely shed some light on whether Mrs May will be forced out or able to go on her own terms.
Will anyone else resign?
Rumours had been circling in Westminster on Wednesday that Mrs Leadsom could quit after she and a number of other Brexit-supporting colleagues in the so-called Pizza Club were absent for the start of Prime Minister's Questions.
Mrs Leadsom's resignation will spark fears in Downing Street that others could follow suit, and eyes will be firmly on the likes of Brexiteer Cabinet ministers including Liam Fox, Penny Mordaunt, Michael Gove, and Chris Grayling.
What happens to the Withdrawal Agreement Bill now?
With no Commons Leader to introduce the Business Statement to MPs on Thursday, it is unclear who will outline what will happen in the House in the first week of June.
The PM could appoint a new Commons Leader overnight ahead of the statement, or ask another minister to step in.
It will be up to the Government to decide if they still want to include the WAB in the business for the week of June 3.
What will happen on Friday?
Sir Graham Brady will meet Theresa May on Friday for a meeting which could seal her fate. He will then consult with the 1922 Committee executive, of which he is chairman.
Mrs May had previously agreed to set out the timetable for her departure after a crunch vote on her Brexit deal, widely expected on June 7.
That deadline appears to have been brought forward with the announcement she will meet Sir Graham the day after polling day for the European elections, but ahead of the results - which are expected to be disastrous for the Conservatives - being announced from the early hours of Monday.