Trinity Mirror revealed in a statement that Bailey gave the board her notice today and is expected to leave at the end of the year.
The group, which publishes the Daily Mirror and 130 regional newspapers, will now publicly start the search for her successor.
Bailey said: "For the past 10 years I have had the privilege of being CEO of Trinity Mirror, a fascinating and all consuming role. Newspapers are a business like no other.
"Now I feel the time has come to hand over to someone else to take up the challenge and for me to seek new challenges and opportunities elsewherer. My immediate priority is to continue to run the business to deliver the best possible performance for 2012."
Sir Ian Gibson, chairman, Trinity Mirror said: "The Company and the Board are grateful to Sly for her immense contribution and leadership over an extended period and wish her well for the future."