Bailey said she plans to seek new challenges after 10 years in the role, however, media analysts have claimed that the move was forced by a potential shareholder revolt.
The company, which publishes the Daily and Sunday Mirror, The People, Scotland's The Daily Record and 130 regional newspapers, released a statement announcing that the search for her successor would begin now.
Group chairman Sir Ian Gibson said: "The company and the board are grateful to Sly for her immense contribution and leadership over an extended period, and we wish her well for the future."
Bailey took over the role in 2003 and has led the company through a number of cutbacks in its fight to survive the current economic crisis and changing world of publishing.
She has overseen a number of controversial moves, including a pay freeze in 2008 that was slammed by the union; and the closure of its Liverpool plant, with printing of the Liverpool Echo moved to its Manchester facility.
Bailey said: "For the past 10 years, I have had the privilege of being CEO of Trinity Mirror Plc, a fascinating and all consuming role. Newspapers are a business like no other.
"Now I feel the time has come to hand over to someone else to take up the role and for me to seek new challenges and opportunities elsewhere. My immediate priority is to continue to run the business, to deliver the best possible performance for 2012."
A spokesman for Trinity Mirror said that no other comment would be made.
Meanwhile, The Telegraph claimed that rather than leaving of her own accord, the move has been forced by investor unrest over her £1.7m-a-year pay packet and a massive drop-off in share price – since Bailey came to power she has reportedly earned £14m, while share price has plummeted by 90%.
The board had proposed a £500,000 cut to Bailey's short-term cash and share bonuses, but according to The Telegraph report, around a third of shareholders were to vote against the package at Trinity’s annual general meeting next week.
Media analyst Roy Greenslade's blog was this morning titled Good riddance to Bailey, in which he claims that journalists across the company's national and regional titles "whooped with joy" at news of her departure, bringing to and end 10 "unpopular" years.
