Sir Liam took up the role in 1998 and is the 15th person to hold the position since it was established in 1855. He is longest serving CMO of modern times. His last day will be 31 May.
Professor Dame Sally Davies will act as interim chief medical officer (CMO) for England after Sir Liam steps down. An open competition to appoint a new permanent CMO will be held over the summer.
At the launch of his annual report in March, Sir Liam said he was pleased with several achievements during his time as CMO, particularly with regard to the public smoking ban.
But he said he had 'unfinished business' tackling the public health issues attached to the price of alcohol. Implementing a minimum alcohol price 'will potentially make a huge difference and turn the tide on binge drinking', he said.
Sir Liam has said that young people should not drink any alcohol until they are 15 and after that only in a supervised environment. Launching new guidance on alcohol, he said there was no evidence that introducing children to alcohol at an early age reduced problems in later life.
Sir Liam had originally envisaged leaving his post when he turned 60 in mid-2009, but agreed to stay in his role to supervise the response to the swine flu pandemic in 2009.
He acted as the face of the Government's response to swine flu throughout the pandemic and spoke to Healthcare Republic as the initial wave receded, as details of the swine flu vaccine were revealed and as the second wave of cases emerged.
In the resignation letter be issued last December, Sir Liam said had been pleased to see many of his policy recommendations being carried forward into legislation, including recommendations on stem cell research, reforms to the GMC, changes to consent for organ and tissue retention and the creation of the Health Protection Agency.
He also said he had been pleased that reforms he proposed to improve quality and safety of care were fully embedded in the NHS, including clinical governance, a patient safety programme, procedures to identify, and prevent harm from, poor clinical practice.
But Sir Liam was also the architect of the widely criticised Modernising Medical Careers reforms and the implementation of Medical Training Application Service, which left the recruitment process for new doctors in chaos in 2007.
Sir Liam admitted in 2008 that the MTAS had made it harder to identify good candidates for hospital jobs. He said that too many changes had occurred at once and, as a result, application forms might have made it harder to identify strong candidates.