The younger Murdoch said he was leaving the executive post to shield BSkyB from the phone-hacking scandal that enveloped the defunct Sunday tabloid News of the World, its British parent News International and News International's parent company, News Corp., CNN reported.
James Murdoch has been slammed by accusations News of the World hacked into phones and eavesdropped on crime victims, politicians, celebrities and others. He has denied he knew about the hacking at the newspaper, which he ordered closed last summer because of the scandal.
In his resignation Tuesday, the younger Murdoch said he was determined BSkyB interests "should not be undermined by matters outside the scope of this company."
"I believe that my resignation will help to ensure that there is no false conflation with events at a separate organization," he said.
James Murdoch will remain as a director of BSkyB. Tuesday's resignation followed his stepping down as chairman from News International in February.
The phone-hacking scandal broke as News Corp. was moving to grow its ownership of BSkyB last summer. The planned expansion was shelved as outrage over the hacking grew.
London's Metropolitan Police have three investigations under way into the scandal, which also includes allegations of e-mail hacking and police bribery. The matter also is being investigated by two parliamentary committees and an independent panel.