The veteran premier of nine years made the announcement Monday evening during a surprise caucus meeting.
"Earlier today, I asked Yasir Naqvi, our party president, to convene a leadership convention at the earliest possible time," he said in a prepared statement to reporters and MPPs, adding that he will also prorogue the legislature to allow allow time for the government to negotiate labour agreements with the public sector.
"I will remain as Premier until that leadership convention."
Reaction from politicos across the country has been swift.
Some have even raised the idea of McGuinty running for the Federal Liberals.
[ Related: Ontario Premier Dalton McGuinty resigns from office ]
According to the Canadian Press, a McGuinty campaign team is ready to go:
"For the past month, a draft campaign has been in the works to persuade McGuinty to jump into the federal fray.
Some of his closest campaign advisers have been involved, including brother Brendan McGuinty -- who was on hand for McGuinty's news conference Monday -- and Don Guy, campaign director for each of McGuinty's three winning provincial campaigns.
Deputy chief of staff Dave Gene, former chief of staff Chris Morley and former operations director Charlie Angelakos are also part of the group.
Sources say a leadership campaign road map has already been sketched out."
In an email exchange with Yahoo! Canada News, Liberal insider Warren Kinsella said if McGuinty ran for the federal leadership, McGuinty would win.
"I've been privileged to work for him for more than a decade. He is an extraordinary guy, and a historic political success," he told Yahoo!
"If he runs federally, I and many others will follow. And he will win."
When asked about a potential federal leadership run at his press conference, McGuinty would only say that he hadn't made any plans about the future.
McGuinty 'going federal' was also a common theme on Twitter:
Why did Dalton McGuinty resign? Who is betting on federal Liberal leadership? — Amanda Lang (@AmandaLang_CBC) October 15, 2012
Others were more subdued, focusing on McGuinty's past rather than his future:
Mr McGuinty is a friend, a good man and a fine leader. He's been a great Premier and a man of enormous decency and integrity. I salute him — Bob Rae (@bobraeMP) October 15, 2012
People always say nice things about politicians. But I can honestly say, Dalton McGuinty is an entirely decent, admirable human being. — John Ivison (@IvisonJ) October 15, 2012
Several readers of Yahoo! Canada News were upset that the resignation came with a prorogation of the legislature:
"He prorogued the legislature to avoid being held in contempt re the gas fired generators scandal"
"As usual he's taking the arrogant way out--rather than face the people. I think he's getting out one step ahead of the proverbial 'sheriff' because he's proroguing the legislature as well. In affect, he quashing all debate on the contempt motion. What a piece of work this guy is."
"When the going gets tough? Dalton puts his tail between his legs and goes to ground. How typical of the way he has run Ontario, into the ground."