Connolly, who previously worked at Starcom and Leo Burnett, will leave the regulator in March after two-and-a-half years, although he was originally contracted for three. Ofcom will start looking for a successor in January.
By the time he leaves Connolly will have overseen three TV trading seasons.
He is responsible for ensuring that ITV acts fairly in its dealings with advertisers and agencies and complies with the terms of CRR, which was a precondition of the merger between Carlton and Granada.
Connolly's decision to quit has coincided with Ofcom announcing that it will shelve plans to conduct a review of the UK TV sales market.
Ofcom has cancelled the review, which was due to take place next year, after a preliminary analysis of the market. It said there had been no formal complaints about the operation of the television advertising sales market and no calls from the advertising or broadcasting industries for such a review.
Despite intense lobbying from ITV, Ofcom has also indicated that it is not yet willing to recommend to the Office of Fair Trading that it end the CRR procedure as ITV1 still attracts more than 40% of television advertising budgets.
However, it said it was monitoring the situation and any change to CRR would have to demonstrate that 'the wider (TV) market would not be adversely affected by any such modification'.
Although Connolly had to deal with three formal complaints in the first six months of the process, it is understood that the number of enquiries from both advertisers and agencies has fallen.