The financial spread betting firm said Peter Hetherington, current chief operating officer and a a board member since 2002, will be appointed as interim chief executive subject to regulatory approval.
"During my time at IG Group I have seen our business transform, as we have grown revenues from £12m to an underlying £400m," Howkins said.
"In my time as chief executive, we have grown earnings per share from 10.88p to an underlying 41.07p, and have gone from less than 10 per cent of our revenue coming from outside the UK to now almost 50 per cent."
IG Group chairman Andy Green added: "The board is disappointed to lose somebody with Tim’s proven leadership skills but fully understands his decision."
"The board has commenced a thorough search and selection process for a permanent successor, and I am pleased that Peter Hetherington, who has been integral to the successful development of the company, has confirmed that he would like to enter this process."
The news came as IG Group said pre-tax profit for the year ending 31 May fell 13 per cent to £169.5m, down from £194.9m a year earlier, after the Swiss franc turmoil in the currency markets back in January.
It's one of a number of brokers which were bruised after the Swiss National Bank scrapped its four-year old currency ceiling in mid-January, sending the Swissie as much as 39 per cent higher against the euro and leaving clients with heavy losses.