BBC director general Greg Dyke has resigned in the wake of the official Hutton inquiry into the death of scientist David Kelly.
Dyke's decision to step down follows BBC chairman Gavyn Davies' resignation on Wednesday, shortly after the report was published.
The BBC has announced that Dyke's deputy Mark Byford will step in as acting director general.
Dyke said he hoped their departures meant "a line can be drawn under this whole episode".
The pair quit after a BBC news story by journalist Andrew Gilligan, which claimed that the UK government had distorted intelligence to make the case for war in Iraq, was branded "unfounded" by the inquiry, presided over by Lord Hutton.
Soon after Gilligan's news story was broadcast on the BBC last year, the main source for his story - David Kelly - was unmasked in the media and committed suicide soon after.
The government says it still believes the BBC should apologise for broadcasting a "false allegation".
Lord Hutton's report cleared the government of "sexing up" its Iraq weapons dossier with unreliable intelligence. It criticised "defective" BBC editorial controls over defence correspondent Andrew Gilligan's broadcasts on the Today programme.
Dyke's decision to go came after BBC governors spent Thursday morning in crisis talks in London.
The resignations follow former Downing Street media chief Alastair Campbell's claim that Davies and Dyke had made things worse by continuing essentially to stand by the story.
The departure of both the BBC chairman and director general leaves the corporation rudderless at a time when calls have been growing for the BBC to come under outside regulation.
Culture Secretary Tessa Jowell has said the Hutton report will be taken into account in the 2006 review of the BBC's charter.
In his resignation statement, Mr Davies said that as the man at the top he had to take responsibility.