The Republican politician, who has represented his Staten Island constituency since 2011, initially said he would continue serving after admitting to hiding $1million worth of wages and receipts from a Manhattan restaurant he part-owns.
But now he will step down, allegedly as a result of a meeting with House Speaker John Boehner. The 44-year-old has formally announced his resignation and will leave office on January 5.
In a statement released Monday, Grimm said: 'After much thought and prayer, I have made the very difficult decision to step down from Congress effective January 5th, 2015. This decision is made with a heavy heart, as I have enjoyed a very special relationship and closeness with my constituents, whom I care about deeply.
'The events which led to this day did not break my spirit, nor will of the voters. However, I do not believe that I can continue to be 100 per cent effective in the next Congress, and therefore, out of the respect for the Office and the people I so proudly represent, it is time for me to start the next chapter of my life.
'It has been an honor and a privilege to serve the hardworking families on both sides of the Verrazano, and I am sincerely grateful for the love and support that I have received from so many over the past few difficult months.
'I have seen first-hand how extraordinary the people of this district are - their values, their love of community, and their care for each other in the best and worst of times - it is humbling. I am grateful, and I will always keep them in my prayers.'
Boehner's spokesman declined to comment to the New York Daily News, saying the speaker's office does not discus 'personal meetings.'
Grimm's resignation means Governor Andrew Cuomo must call a special election to designate a new member of Congress.
Prosecutors have suggested Grimm should spend 24 to 30 months in prison; Grimm's lawyer suggested 12 to 18 months to Federal Judge Pamela Chen.
But a person who is familiar with the congressman's negotiations told DailyMail.com previously that the Republican lawmaker doesn't expect to go to jail at all.
'I'm going to get back to work and work as hard as I can,' he previously said.
His fate will be up to Chen when she hears the terms of a plea agreement. Grimm was originally charged with 20 separate federal crimes and has been serving his constituents while under the terms of a $400,000 bond granted in the spring.
Grimm entered a guilty plea on a single count of 'aiding and assisting in the preparation and filing of a false or fraudulent tax return.'
Sentencing is months away – on June 8, according to the Associated Press.
Loretta Lynch, the sitting U.S. Attorney in Brooklyn, N.Y., brought the indictment against Grimm this year making him the first federal lawmaker to face criminal charges since 2008.
Lynch later became President Barack Obama choice to succeed Eric Holder as U.S. attorney general.
By pleading guilty to a single tax charge, Grimm will avoid a trial that was scheduled to convene in February. Jurors would heave heard details of Grimm's alleged scheme to hide more than $1 million of his restaurant's sales and wages in order to dodge taxes between 2008 and 2010.
He was also accused of hiring illegal immigrants to work for him.
Neither prosecutors nor Grimm's attorney has commented for the record.
Upon leaving the court today Grimm acknowledged his wrongdoing and apologized for his actions.
'I should not have done it and I am truly sorry for it,' he said, per AP.
The confession was a far cry from Grimm's claims when he was first charged that prosecutors were on 'a political witch hunt.'
'I'm a moral man, a man of integrity,' he said at the time.
