Lord Pearson had a very difficult general election campaign, telling one interviewer he could not remember his own manifesto in detail, BBC political correspondent Ross Hawkins reports.
Now Lord Pearson has concluded he neither enjoys, nor has an aptitude for, conducting party politics, the BBC correspondent adds.
An interim leader will be chosen at UKIP's annual conference next month.
Lord Pearson, who defected to UKIP from the Conservatives in 2007, will remain in place as party leader until the conference in September.
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| BBC - Lord Pearson of Rannoch |
Lord Pearson was elected to the position after the previous leader, Nigel Farage, stepped down to concentrate on contesting the Buckingham parliamentary seat held by the speaker of the House of Commons John Bercow.
Nigel Farage lost and went on to say he had not realised how "popular" Mr Bercow was in Buckingham.
Mr Farage will decide whether to stand for re-election to his old job, despite his injuries.
He told the BBC:
"I'm not going to say I'm absolutely not going to do the job again but I've got to decide, in the wake of that accident, whether I'm strong enough to take the job on."I think given the size of Nigel Farage's ego, he will contest it again, and UKIP will continue to be nothing more than the single issue party they are.
Anti European but their MEPs seem happy to take the salaries. Very strange.
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