Peter, who was warded the MBE for services to journalism and North-East community life in 2013, will continue to contribute to the Echo as a regular writer and columnist.
His successor in the editor’s chair at the Darlington-based newspaper will be announced in due course.
Peter, 53, first joined the Echo in 1984 as a reporter, having spent three years as a trainee with the Scunthorpe Evening Telegraph.
He rose through the ranks to become the paper’s deputy editor, before departing to become editor of the Hartlepool Mail in 1997.
Peter took up his present role in January 1999, and was presented with a lifetime achievement award by the Society of Editors to mark his 15th year as editor in 2014.
His departure was revealed in an announcement made to staff by Newsquest North managing director David Coates.
Said David: “Peter is quite rightly acknowledged as one of the leading journalists of his generation.
“Under his stewardship the Northern Echo has grown its audience and achieved changes that have improved the lives of people in the North-East.
“I am delighted he will be continuing his long association with the newspaper once he steps down from editing and I will look forward to working with him for many years to come.”
Peter tweeted: “It is with a heavy heart that after 17 years I have decided to step down as editor of The Northern Echo.”
Some of Peter’s erstwhile rivals also took to Twitter to issue plaudits following the announcement.
Paul Robertson, former editor of Newcastle daily The Chronicle told Peter: “It was a pleasure working with you as a fellow editor. Top journalist.”
Sunderland Echo editor Joy Yates said: “Pete, you’ll be a huge miss but a success in whatever your next venture may be. ”
Joy’s predecessor Rob Lawson added: “Huge congratulations for doing such a great job for so long, You’ll be a huge miss to the paper, the community and yr team.”