Kelly led the Twins to a pair of World Series titles but also endured eight straight losing seasons during a 15-year reign. He cited fatigue and personal reasons when he made the announcement at a news conference in the Metrodome.
"It's been a wonderful place to work, wonderful place to raise my son," said Kelly, 51. "It's just been a fantastic ride and I just feel right now it's a good time to step aside and let someone else take over."
Owner Carl Pohlad and general manager Terry Ryan have begun a search for a replacement, although both wanted Kelly to stay. Coach Paul Molitor, who is eligible for the Hall of Fame in 2003, is an obvious possibility.
Kelly's contract expired following the 2001 season. He said the length and amount of a new contract was not an issue, adding that he probably could have filled in the amount of the check.
Jerry Sloan of the NBA's Utah Jazz now has the longest tenure among coaches or managers in sports, having started in that position in 1988. Bobby Cox is tops in baseball, having managed the Atlanta Braves since 1990.
The soft-spoken, gray-haired Kelly thanked just about everyone in the organization, including Pohlad, who gave a 35-year old a chance to manage the team in 1986.
"That was quite a risk on his part at the time," said Kelly, a Minnesota native who posted a 1,140-1,244 mark.
In 1987, Kelly guided the Twins to their first World Series title. They won again in 1991 but suffered in a small market and had eight straight losing seasons between 1993-2000.
"That's two pretty good words for me today," he said.
Minnesota was first in the American League Central Division midway through 2001 before fading. Kelly admitted that the final few months of the season took their toll.
"I was somewhat tired and worn out," he said. "I tried to stay in shape, but there were days where that just wasn't good enough. Maybe it was the travel catching up to me or the stress of the job. I don't know."
Kelly, who also had to keep up with one of the youngest teams in baseball over the past few years, said he had some personal reasons for stepping aside as well, although he would not specify any.
"I have a lot of reasons why," he said. "Some are very personal that I'm going to keep to myself."
Kelly had the opportunity to manage current or likely Hall of Famers Steve Carlton, Dave Winfield and Molitor. He thanked them for making his job easy.
"And how lucky am I to see every game that Kirby Puckett played," Kelly added. "So there's a lot that I have to be thankful for."
With the help of Puckett, the Twins made an improbable run to defeat the St. Louis Cardinals in the 1987 World Seris, then overcame two losing seasons before downing the Atlanta Braves in a memorable 1992 Series.
Unable to afford high-priced stars, however, the Twins went 524-702 from 1992-2000. And in the past few years, they have had to field one of the youngest teams in baseball.
"We filtered out a number of players, minimal payroll, tried to stay respectable and competitive," Kelly said. "It was a lot of work but I think we now found the right combination of people."
With one of the best rotations in the AL, the Twins stayed in the playoff race until the final weeks of the 2001 season, finally falling to the Cleveland Indians. They lost 13 of their final 16 games in July.
"Unfortunately, in the month of July, the manager could not find a way to stop that prolonged bump," Kelly said. "That was a little disappointing for me."
But after losing fans over the previous few seasons, the Twins generated interest again.
"That was very rewarding for me personally," Kelly said.
In the short term, Kelly intends to dedicate some of his time to his golf game, having played each of the past two days. He said he would not return to manage.
"I'm going to try to manage by bank account and golf score," he said. "If I was going to do that again, I would just stay here."