A statement from Trinity Mirror said that Bailey, who has been in the job for ten years, would leave the firm by the end of the year.
On Wednesday, the Financial Times said that Bailey was facing a shareholder revolt over her reported £1.7m remuneration. It was understood that a protest was being discussed for the company's annual general meeting next week.
Aviva Global Investors, which has a 11.9% stake in Trinity Mirror, had reportedly threatened to go public with its opposition before the weekend.
One investor told the Financial Times that Bailey's inflexibility over her own pay level had "helped to bring everything to a head and wrote her own exit".
However, the source also questioned what terms she would get for leaving the company, which publishes various newspapers including the Mirror, Sunday Mirror and the People, along with 130 regional papers.
In a statement, Trinity Mirror chairman Sir Ian Gibson thanked Bailey for her "immense contribution and leadership over an extended period".
Discussing her departure, Bailey said: "For the past ten years I have had the privilege of being CEO of Trinity Mirror plc, 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 elsewhere."
Trinity Mirror, which has been hit with allegations of phone hacking, has endured a 90% fall in its share price over the past five years as the economic downturn and rise of the internet eroded traditional revenues.