The 30-year-old, who played for Shropshire earlier in his career, will skipper the Pears for the final time this week when they host Leicestershire in the County Championship.
Leach will remain at New Road but felt the time was right to step down and focus on his game. Worcestershire have endured a disappointing year in all formats and currently sit fourth in Division Three of the Championship, heading into the final round of fixtures.
Leach, who has also played club cricket for Shifnal and Shrewsbury, said: “It’s obviously been a very tough decision, one that has been on my mind for some time, if I’m honest.
“I made the decision just before the home game with Sussex three weeks ago that this was going to be my final season as captain.
“It was a difficult decision to make, but one that I feel is right, not only for myself but also for the group as well.
“I’ve done it for five years, and I’m immensely proud of what I’ve managed to achieve in some difficult times for the club over that five years.
“I’ve had a lot of things to deal with on and off the field, and now I guess the time is right to focus on my cricket and getting back to really enjoying it and doing the best I can with the bat and the ball.”
After taking over the captaincy from Daryl Mitchell in 2016, Leach led the Pears to promotion from Division Two of the Championship the following year, taking 69 wickets.
The Pears also reached the the semi-finals of the Royal London Cup.
“That last day against Durham when we went up as champions (in 2017) was definitely the highlight from a personal point of view and holding the Division Two trophy aloft at New Road.
“I’ve given everything to this club as a player pre-captaincy and, as captain, I’ve done exactly the same.
“I’ve led the club with immense pride and done my best every single day. That is how I will continue to operate as a cricketer.”
Worcestershire head coach Alex Gidman said: “Joe’s efforts as a captain have been of the highest order. He has led the team through some very challenging times and has done an exceptional job.
“He should be very proud of his efforts, and I’m sure he will look forward to some more successful years as a bowling all-rounder for us.
“I know he will put a lot of effort into, firstly, his cricket, which is really important and, secondly, he will get right behind whoever the next captain is and still do a very job as a senior player.
“There is no doubt he has still got a huge amount to offer.
“He is still a very big part of the plans and a great man for us to have around still.
“We’ve got a great relationship and that will continue. We’ve had our differences of opinion, which any healthy relationship has, and we can challenge each other very well.
“Fundamentally, I’ve always believed the captain is the most important part of the whole club and has to be comfortable with what he wants on the pitch and how he goes about his business, and Joe has done that to the best of his ability.”