The 71-year-old Takeda is also a powerful International Olympic Committee member and the head of its marketing commission. When he resigns, he will lose the IOC membership which is tied to his JOC presidency.
The scandal, which French authorities have been investigating for several years, has cast a long shadow over the Tokyo Olympics and underlines flawed efforts by the IOC to clean up its bidding process. Japan is spending at least $20 billion to organize the games, which open on July 24, 2020.
"I have not done anything wrong," he said. "I will continue to do my best to clear my name." He said it was his own decision, although several months ago he denied he intended to step aside. But pressure has mounted with the games getting closer and the IOC wanting to distance itself from another scandal.
"I am sorry I have upset the society ahead of the Tokyo Olympics," he said, speaking to about 100 reporters in the JOC's small boardroom. "I feel bad about that." He said his decision was based on getting "a younger generation" to lead the Japanese Olympic body.
The organization of the last Summer Olympics in Rio de Janeiro was chaotic and ended eventually with the arrest of organizing committee president — and Brazilian Olympic Committee president — Carlos Nuzman in a similar vote-buying scandal.
The favorite to replace Takeda is Yasuhiro Yamashita, a judo gold medalist in the 1984 Olympics. Takeda has acknowledged he signed off on about $2 million in payments to a Singapore consulting company, Black Tidings, and its head Ian Tan Tong Han. The payments came just before Tokyo was picked in 2013 by the IOC, beating out Istanbul and Madrid.
French investigators have linked Black Tidings to Papa Massata Diack, one of the sons of powerful ex-IOC member Lamine Diack of Senegal. Lamine Diack was known to have huge influence over Olympic voters in Africa.
Takeda has said he was not involved in the decision-making process and had no reason to question what he termed a "regular commercial contact" approved by others at the JOC. "The IOC takes note with the greatest respect of the decision taken by Mr. Takeda to resign as an IOC Member," the Olympic body said in a statement. "Our respect of this decision is even greater because he took this step to protect the Olympic Movement while the presumption of innocence, on which the IOC insists, continues to prevail."
The scandal has also shined a light on the role of Dentsu , the giant Japanese advertising and marketing agency. Since getting the Olympics, Dentsu has helped Tokyo organizers line up a record $3 billion in local sponsorship. This is at least twice as much as any previous Olympics.
Dentsu has acknowledged it advised the Japanese bid committee about bid consultants just before the vote in 2013. Tan was among them. In a 50-page report by the Japanese Olympic Committee investigating the bid, it said the committee — citing an evaluation from Dentsu — decided "that Tan was an extremely competent Asian consultant."
It is not clear if Dentsu is a target of French investigators. IOC President Thomas Bach , speaking in December in Tokyo and standing alongside Takeda, described the games as "the best prepared" in history. They have overcome early problems that included a redesign of the new national stadium because of soaring costs, and a plagiarized logo design.
General cost overruns have continued to be an issue for Tokyo, which is spending three times more than it said it would when it was selected. All venues are expected to be ready on time. The new national stadium is to be completed by the end of the year.
Takeda is a distant member of Japan's royal family, the great grandson of the Meiji emperor who ruled late in the 19th century and into the 20th. He competed in equestrian events in the 1972 and 1976 Olympics.
AP video journalist Kaori Hitomi contributed to this report.
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