Greenblatt had stepped up his public engagement before the announcement of the economic plan, but it was perhaps most notable for criticizing Palestinian leaders on Twitter for their rejection of the proposal and the as-yet unseen political portion of the peace plan.
"The kindness and unique talents of Jason Greenblatt, a dear friend and colleague, will be missed in the White House", Ivanka Trump said in a statement.
"It has been the honor of a lifetime to have worked in the White House for over two and a half years under the leadership of President Trump", Greenblatt said in a statement.
The timing of the release of the Trump Middle East peace plan - and its followup - is now in question, although President Donald Trump is still expected at this point to unveil his peace plan sometime after Israel's national election on September 17.
"His dedication to Israel and to seeking peace between Israel and the Palestinians won't be forgotten", the president continued.
Greenblatt had been working closely with Jared Kushner, President Trump's son-in-law and a top White House adviser, to deliver a plan that would be amenable to both sides in the region.
Greenblatt, a former lawyer for Trump, said he was grateful to have been part of the team to draft "a vision for peace".
Greenblatt "was an apologist for the most extreme, hardline government in the history of Israel", Hanan Ashrawi, a senior Palestinian official, told AFP.
A senior United States official said Greenblatt was leaving to spend more time with his family but left on good terms and "holds the confidence of the president".
"This vision has the potential to vastly improve the lives of millions of Israelis, Palestinians and others in the region".
A senior administration official told reporters Thursday that the negotiating team's portfolio has also partly merged with the administration's larger operation focused on Iran.
Channel 13 also reported that Israeli Prime Minister Benjamin Netanyahu thanked Greenblatt on Thursday, praising him for "his work for peace and security and for speaking the truth about Israel in front of all those who bash it".
USA special envoy Jason Greenblatt addressing the United Nations Security Council in NY. But after the U.S. administration recognized Jerusalem as Israel's capital, officials in Ramallah shunned him, accusing him of becoming a spokesperson for the Jewish state, especially in light of the fact that he often uses his Twitter account to slam the speeches and actions of Palestinians, but never criticizes Israel. They have reasons to expect that, too - from Trump's scandalous decision to recognize the contested city of Jerusalem as the Israeli capital, to his repeated proclamations of loyalty to the state of Israel.
Berkowitz will reportedly fill Greenblatt's post as representative for worldwide negotiations, while Iran envoy Brian Hook will also take on a larger role in crafting the peace deal, according to NBC.
Hook has accompanied Greenblatt and Kushner on trips to the region.