Protesters rallied in the central Plaza Murillo in Bolivia's capital, waving flags and setting off fireworks.
Earlier in the day, Morales, in power for nearly 14 years, said in televised comments that he would submit his resignation letter to help restore stability, though he aimed barbs at what he called a "civic coup."
Bolivia under Morales had one of the region's strongest economic growth rates and its poverty rate was cut in half, though his determination to cling to power and seek a fourth term alienated many allies, even among indigenous communities.
Pressure had been ramping up on Morales since he was declared the winner of an Oct. 20 election.
General Williams Kaliman, the head of Bolivia's armed forces, earlier on Sunday said the military had asked Morales to step down to help restore peace and stability after weeks of protests over the vote.
Luis Fernando Camacho, a civic leader from the eastern city of Santa Cruz who has become a symbol of the opposition, was with the crowds in the capital city.
"Bolivia is going to be the hope for all of Latin America so that communism goes and (the region) has freedom and democracy. We Bolivians are going to take charge of the fight for Venezuela to restore its dignity," Camacho said.
Earlier on Sunday, Morales had agreed to hold new elections after a report from the Organization of American States (OAS), which conducted an audit of the Oct. 20 vote, revealed serious irregularities in the election.