Pope Benedict has announced he will resign the papacy effective February 28:

Dear Brothers,

I have convoked you to this Consistory, not only for the three canonizations, but also to communicate to you a decision of great importance for the life of the Church. After having repeatedly examined my conscience before God, I have come to the certainty that my strengths, due to an advanced age, are no longer suited to an adequate exercise of the Petrine ministry. I am well aware that this ministry, due to its essential spiritual nature, must be carried out not only with words and deeds, but no less with prayer and suffering. However, in today’s world, subject to so many rapid changes and shaken by questions of deep relevance for the life of faith, in order to govern the bark of Saint Peter and proclaim the Gospel, both strength of mind and body are necessary, strength which in the last few months, has deteriorated in me to the extent that I have had to recognize my incapacity to adequately fulfill the ministry entrusted to me. For this reason, and well aware of the seriousness of this act, with full freedom I declare that I renounce the ministry of Bishop of Rome, Successor of Saint Peter, entrusted to me by the Cardinals on 19 April 2005, in such a way, that as from 28 February 2013, at 20:00 hours, the See of Rome, the See of Saint Peter, will be vacant and a Conclave to elect the new Supreme Pontiff will have to be convoked by those whose competence it is.

Dear Brothers, I thank you most sincerely for all the love and work with which you have supported me in my ministry and I ask pardon for all my defects. And now, let us entrust the Holy Church to the care of Our Supreme Pastor, Our Lord Jesus Christ, and implore his holy Mother Mary, so that she may assist the Cardinal Fathers with her maternal solicitude, in electing a new Supreme Pontiff. With regard to myself, I wish to also devotedly serve the Holy Church of God in the future through a life dedicated to prayer.
From the Vatican, 10 February 2013

BENEDICTUS PP XVI

The last pope to resign was Pope St. Celestine V, who did so in 1294 after mere months in office. (Pope Benedict visited his tomb in July of 2010, sparking speculation he would take this very step.) Current canon law provides for papal resignations: “If it happens that the Roman Pontiff resigns his office, it is required for validity that the resignation is made freely and properly manifested but not that it is accepted by anyone.” (Canon 332 §2)

UPDATE: For the record, it appears I was wrong early this AM about Celestine V being the last pope to resign; I thought of him because Pope Benedict visited his tomb twice, once leaving his pallium there, and discounted Gregory XII because of the Avignon mess. From an interview at the Vatican News site :

Vatican Radio: It’s been centuries since a Pope has resigned the See of Peter. Can you tell us about the last Pope to resign?

Dr. Donald Prudlo: The last Pope to resign was almost six hundred years ago. It was Pope Gregory XII, who, in a very sacrificial gesture offered to resign so that the council of Constance could assume his power and appoint a new Pope, and in so doing bring an end Great Western Schism. So that was the last pope who actually resigned. So this is quite an unprecedented event.

Articles by Leroy Huizenga

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