Chairman Paolo Fresco will now take on Cantarella's responsibilities.
In a statement, Cantarella said he had thought about leaving for a long time and decided 'at this complex time for the group, and for Fiat Auto in particular, there had to be a strong break.'
Honorary chairman Giovanni Agnelli said he was sorry to see Cantarella leave the company, adding that they had worked together during the high points of the last decade.
The Italian industrial group is struggling with slumping sales and widening losses. Last year, Fiat Auto made an operating loss of 549 million Euros.
Cantarella's resignation comes amid speculation that Fiat may sell its 80% stake in Fiat Auto to General Motors, which owns the remaining 20%.