The White House said Kohn, 67, would leave at the end of his four-year term and the decision to retire was "his alone," The New York Times reported.
Kohn's departure will be the third vacancy on the Fed's board of governors, a seven-member board that is already down by two members. Randall Kroszner left in January 2009 and Frederic Mishkin left in August 2008.
Currently, the Fed is able to take board actions with fewer than five members voting, due to an amendment to the Federal Reserve Act put into place after the Sept. 11 terrorist attack.
In March 2008, the Fed evoked that privilege in a 4-0 vote to help fund the JPMorgan Chase purchase of Bear Stearns in a quickly arranged fire sale.
Fed Chairman Ben Bernanke has said he would give up the under-five-member voting clause if the Fed maintains the ability to create lending programs when the market required additional liquidity, the Times said.
Notable deaths of 2014 [PHOTOS]