Haley turned in her resignation letter minutes after the U.S. Senate confirmed her as Trump's Cabinet pick.
Under the state constitution, Haley's resignation letter immediately made Lt. Gov. Henry McMaster the 91st governor of South Carolina. His official swearing-in ceremony will be held later. Haley is expected to attend.
After officially resigning, Haley addressed a crowd in the Capitol lobby.
"There's lots of work to do, but we have the right person to do it," she said, referring to McMaster. "It's an absolute privilege and honor to turn over the reins to you."
The South Carolina-born daughter of Indian immigrants became the state's first female and first minority governor in January 2011. The term-limited governor leaves office with two years remaining in her tenure.
Haley used her final State of the State address earlier this month to say goodbye to South Carolinians and a job she called "the greatest honor of my life."
Her departure gives 69-year-old McMaster a job he's long wanted, one year after the veteran of South Carolina GOP politics stunned political observers by becoming the nation's first statewide officeholder to endorse Trump. His support never wavered, despite Democrats' calls to renounce it.
Legislators of both parties are eager for McMaster to take over.
He has said little publicly since Trump picked Haley for the Cabinet position. And he's not expected to make any broad administrative changes. But legislators, many of whom have known McMaster for decades, believe he'll work with them in his characteristic congenial style — a sharp contrast to the combative approach Haley often took as she assailed legislative leaders she disagreed with in speeches and in social media.
Legislators particularly hope McMaster's ascension finally leads to a long-term solution for fixing South Carolina's roads — which again tops their priority list. Haley's threats to veto anything with a gas tax increase stymied efforts for years.
McMaster, the state's former GOP chairman and attorney general for two terms, has been a close ally of Haley's since she trounced him and two other better-known men in the 2010 Republican gubernatorial primary.
Just days after taking a beating at the polls, McMaster endorsed Haley with an exuberant "I'm all in!" Beyond campaigning with her statewide, he arranged a series of private meetings between Haley and skeptical business leaders a week after she publicly chided the state Chamber of Commerce as a fan of bailouts and corporate welfare.
He served on her transition team, and she then appointed him to the State Ports Authority.
During his 2014 campaign for lieutenant governor, McMaster touted his close relationship with Haley.
His support of Haley, then Trump, has helped him accomplish a five-decade first in South Carolina.
Voters haven't elected a lieutenant governor to the state's highest office since 1970. The last time a lieutenant governor ascended to the job through a vacancy was April 1965, when then-Gov. Donald Russell appointed himself U.S. senator following a death. His replacement, Robert McNair, served Russell's remaining three years.
McMaster's move leaves a vacancy in the lieutenant governor's office. While the state constitution calls for the Senate's leader to fill the role, Senate President Pro Tem Hugh Leatherman has refused to leave the Senate to take the largely ceremonial position.
Leatherman resigned his leadership post Tuesday afternoon, as the U.S. Senate was voting on Haley's confirmation.
The Senate must elect a new president pro tem, who would then immediately be sworn in as lieutenant governor. That's expected to be Sen. Kevin Bryant of Anderson, the only Republican senator who wants the job. Leatherman will attempt to get re-elected as president pro tem — a move at least some senators will oppose.