Fischer's term was set to expire in June 2018 and his tenure on the Fed was slated to end in January 2020.
Significantly, barring any further clarification Fischer's resignation might lead markets to believe it implied a lower likelihood of Fed president Janet Yellen being renewed in her post, said Paul Ashworth, chief U.S. economist at Capital Economics.
Fischer's resignation will be effective on or around 13 October.
The 73-year-old will step down on October 13, almost a year before his term as vice chair was due to expire and two and a half years before the end of his term on the Fed's board of governors, the Fed said in a statement.
"During my time on the Board, the economy has continued to strengthen, providing millions of additional jobs for working Americans", he wrote. Mr Trump has said she could be re-appointed, though other candidates are also under consideration.
Mr. Trump has nominated Randal Quarles, a private-equity executive who served in the Bush administrations, for one of the three vacant Fed board slots, but has yet to name his other picks.
On May 21, 2014, the US confirmed Fischer's appointment to the Federal Reserve Board of Governors. "The Fed is going to be quite shorthanded".
"In the years ahead, students and practitioners of macroeconomic policy will continue to draw inspiration from Stan's contributions at the Federal Reserve and the Bank of Israel, his earlier stellar career at the International Monetary Fund and his many and varied academic contributions".
He has also held the job of vice chairman of Citigroup and was deputy director of the International Monetary Fund for almost seven years. He also taught economics at MIT for more than 20 years-former Fed chairman Ben Bernanke was a student.
"It has been an extraordinary privilege - and exceptionally good fortune - for me to have worked closely with Stan Fischer", Bank of England Governor Mark Carney said in a statement.