"I cannot care for my family the way I wish while serving in Congress and fighting these very serious allegations," Wu said in a statement. "The well-being of my children must come before anything else. With great sadness, I therefore intend to resign effective upon the resolution of the debt ceiling crisis."
He said his decision is right for his family, the House and colleagues, The Washington Post reported.
Wu previously said he wouldn't seek re-election, but congressional leaders -- notably House Minority Leader Nancy Pelosi -- had called for an ethics investigation.
The (Portland) Oregonian reported Friday Wu was accused of an unwanted sexual encounter with the 18-year-old daughter of a childhood friend last year.
His announcement came minutes after Oregon's two Democratic senators -- Ron Wyden and Jeff Merkley -- called on him to resign, The Oregonian said.
Wyden and Merkley said in a statement Wu lost his ability to effectively serve in the wake of accusations of improper sexual conduct that "are both jarring and exceptionally serious."
"While he, like every American, deserves an opportunity to address those accusations and defend himself," the two said, "our constituents in the [1st Congressional District] of Oregon deserve a member in the House of Representatives whose main focus is fighting for their interests."