William Hill punters have strongly backed the home secretary, leading the bookie to shorten its odds to 11/10.
Boris Johnson is now the second favourite at 11/8 odds while Brexit campaigner and minister of state for energy Andrea Leadsom is third at 12/1.
The Tories have agreed to choose a new prime minister by 2 September.
Read more: Was Cameron right to resign?
"Theresa May has always been a leading contender to become the next Tory leader since David Cameron was appointed but she did drift out to as long as 7/1 at one point," William Hill spokesman Graham Sharpe said.
"However, since the EU referendum she has been consistently the most heavily backed contender as has now overtaken Boris, who has been favourite all year, in the betting."
However, Sharpe added: "Punters who backed Boris to win two London mayoral elections and a referendum will note that he won all three against the odds."
Boris Johnson trails slightly behind May in Ladbrokes' odds, at 6/4, and Betfair, at 11/5.
Leadsom is currently third favourite at Ladbrokes and Betfair as well - at 12/1 and 13/1 respectively - while Stephen Crabb's, Liam Fox's and Jeremy Hunt's hats have all been thrown into the ring.
Jeremy Hunt said in an ITV interview this morning he is considering running to be the next Tory leader and would also back a second referendum, while George Osborne announced today that he would not run to succeed David Cameron.
Labour in turmoil
Ahead of this afternoon's vote of no confidence in Labour leader Jeremy Corbyn, deputy leader Tom Watson is the favourite at Ladbrokes and William Hill to become the next opposition chief at 3/1 and 9/4 odds respectively.
This is due to the likelihood that the party will follow procedure and allow Watson to step in as an interim head if Corbyn backs down (which, admittedly, he has steadfastly ruled out).
However, Labour ladies Angela Eagle (who resigned yesterday) and Lisa Nandy are also strong favourites at William Hill, where they both have odds of 5/1, and Ladbrokes where Eagle has odds of 6/1 and Nandy 8/1. Dan Jarvis looks set to be another challenger, according to punters, with 6/1 odds at both Ladbrokes and William Hill.
More than 45 Labour MPs and parliamentary private secretaries have resigned from Corbyn's shadow government in the last three days.
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