Woolston, who has led the LEP since it was launched almost five years ago, will formally leave his post at the next board meeting on 28 Jan when his replacement will be announced.
Under his leadership the LEP has secured £1.5bn in central government and European funding to finance new economic growth and successfully bid for two Enterprise Zones.
The first zone has created more than 1,200 new jobs to date and the second zone is anticipated to deliver a further 14,000 jobs.
Woolston was also a key influencer in the creation of the North East Growth Hub – the comprehensive online resource for business advice, funding information, networking, news and events.
Speaking on his decision, he said now was the right time to stand down from his post and make way for a new chair.
He said: “The timing is right for a new chair to lead the North East LEP forward at an exciting time in its development and for the region.
“We are entering a new year with a devolution deal for the North East agreed with government and the combined authority, which will mean a new role for the LEP.”
Andrew Hodgson, North East LEP vice chair, added: “Under Paul’s leadership, the North East LEP has secured significant funding from Europe and government to underpin vital economic development.
“He has helped build and establish the LEP in a changing political landscape and worked hard with the most senior levels of government to ensure the North East’s Strategic Economic Plan is understood and supported.”
Councillor Simon Henig, chair of the North East Combined Authority and leader of Durham County Council, said: “Paul has created a strong foundation for the North East to move into a new phase as we work towards proposed devolution and an elected mayor.”