After Houston's elimination from the NBA playoffs inside the bubble in Orlando, Fla., Morey approached team owner Tilman Fertitta about leaving the position, according to ESPN. Both sides worked through an agreement to end his 13-year tenure as general manager and 14 years overall with the organization.
"After discussing my thoughts with family and close friends, I've decided I'll be stepping away from the Rockets organization effective November 1st," Morey said in a statement Thursday. "Tilman and I have had many conversations since I returned, and his unwavering support and counsel during our time together has been critical to our success.
"It has been the most gratifying experience of my professional life to lead the Rockets basketball organization, and I look forward to working with Tilman and the management team on the transition. I am very confident that the future -- for the Rockets, and for our incredible fans -- is in great hands, and that the Rockets will continue to perform at the highest level."
Morey, who hasn't ruled out a future return to the NBA on the team side, will remain in an advisory role for a brief period to help in the Rockets' head-coaching search, according to ESPN. Former head coach Mike D'Antoni and the Rockets parted ways last month.
The Rockets are planning to promote executive vice president of basketball operations Rafael Stone to general manager. According to reports, Houston also is promoting Eli Witus to assistant general manager.
"On behalf of the entire Rockets organization, I would like to thank Daryl Morey for his hard work and dedication over the past 14 seasons," Fertitta said in a statement. "Daryl is a brilliant innovator who helped the Rockets become a perennial contender.
"I have truly enjoyed working with Daryl and couldn't have asked for a better general manager to have at the start of my ownership. I wish him and his family all the best."
Under Morey, the Rockets have reached the postseason in each of the past eight seasons -- the league's longest current streak. That streak has included two trips to the Western Conference finals.
Despite the Rockets' success on the court, Morey's final season on the job became engulfed in scrutiny after his tweet supporting freedom in Hong Kong led to China pulling the NBA off its broadcasts and suspending sponsorship agreements. China ended its one-year ban of NBA games during the NBA Finals this month.
NBA commissioner Adam Silver and Fertitta supported Morey, despite China's calls for his firing. Silver later estimated that the league lost about $400 million in revenue due to the severed relationship with China.