The batting superstar, who led Mumbai in all of the previous four editions of the IPL, will be replaced by off-spinner Harbhajan Singh as captain in the Twenty20 tournament that starts on Wednesday, April 4.
"The Mumbai Indians is more than a team. It is like a family to me. At this point of time, I feel I need a break from the responsibility of captaincy," Tendulkar, who turns 39 this month, said.
Tendulkar, who smashed an unprecedented 100th international century during the Asia Cup in Dhaka last month, said the new captain would have his "wholehearted support."
"After due consideration, I discussed my intention to hand over the captaincy of the team to Harbhajan Singh," he said.
Tendulkar, who has brushed aside any speculation about his retirement, holds four batting world records – most runs and centuries in Tests and one-day internationals.
Mumbai, who lost to Royal Challengers Bangalore in the play-off last year, will clash with defending champions Chennai Super Kings in their opening match in Chennai on April 4.
Harbhajan said he was looking forward to leading the team.
"Mumbai Indians is a great team with explosive talent and promising youngsters," said Harbhajan.
"I am committed to do the very best and look forward to leading the team to play to its full potential during the season."
Harbhajan is not new to captaincy, having already led the Mumbai Indians to the Twenty20 Champions League triumph last year.
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