He told President Sergio Mattarella he was standing down after three parties in his government refused to back him in a confidence vote the night before.
The president asked him to remain as caretaker leader and early elections will take place this autumn.
Far-right leader Giorgia Meloni is already being tipped to win.
Mr Draghi, 74, was a popular choice as prime minister, dubbed Super Mario for his handling of the eurozone crisis as head of the European Central Bank.
