His exit comes amid a major restructuring of the agency's senior management by Garry Lace, who was appointed chief executive at the end of last year.
Richards had run the agency between the departure of Martin Smith as chief executive in May 2001 and Lace's arrival. Formerly in charge of Grey's flagship Procter & Gamble and Mars businesses, Richards has focused mainly on its internationally aligned business.
Lace is attempting to reposition the agency by building a more equal balance between international and domestic accounts.
"The company is changing direction and becoming a very different animal," Richards said. "I don't disagree with what Garry is doing but he and I are different people."
Richards joined Grey in April 1997, having built his career running large pieces of international business.
He was appointed as the managing director of Grey in January 2001.
"I certainly want to stay in brand communication, but I don't know which side of the agency and client divide it will be," Richards added.
Lace said: "Steve has made a significant contribution to the agency and we wish him well whatever he decides to do."