University of Auckland Vice-Chancellor Stuart McCutcheon will step down at the end of next year.
McCutcheon, who has led the university since January 2005, told the University Council last nightthat he will not seek a new term after his third five-year term ends.
He is the country's third highest-paid public official whose salary is fixed by the State Services Commission, earning between $710,000 and $719,999 in the year to June 2017, behind only the heads of the Accident Compensation Corporation ($830,000-$839,999) and the Ministry of Business, Innovation and Employment ($800,000-$809,999).
For comparison, Prime Minister Jacinda Ardern earns only $471,000, although former NZ Superannuation Fund head Adrian Orr, whose salary was fixed by the super fund's board, earned more than any of these at $1.2 million in 2016-17.
University Chancellor Scott St John said the university had begun an international search for the next vice-chancellor, and planned to appoint an international search firm.
A spokeswoman said St John had offered staff "the opportunity to meet and share views on the appointment".
"He will do the same with representatives of students, Māori communities, and external stakeholders," she said.
"Short-listed candidates will be interviewed and appointed by the full council which includes members elected by the academic and professional staff and by students, representatives of Māori and alumni, and appointed by the Minister."
Tertiary Education Union president Dr Sandra Grey said academic staff at Wellington's Victoria University were consulted before its current vice-chancellor Dr Grant Guilford was appointed in 2014.
"What we asked for is that there is the involvement of staff right upfront saying what sort of leader do we think the organisation needs to fulfil its mission, and that a shortlist of candidates come and give them some vision of what they are looking for," she said.
McCutcheon, who also chairs the national body Universities NZ, is the country's longest-serving current vice-chancellor. Grey said most university heads served only two five-year terms.
"There is a long tradition in universities of leadership positions changing so you get different perspectives and different views," she said.
McCutcheon has led the university through a difficult period. The University of Auckland was ranked 67th in the world in the Times Higher Education rankings when he started in 2005, but dropped out of the world's top 200 last month.
Universities NZ director Chris Whelan said university funding had generally kept pace with consumer prices over the past 15 years but their costs rose at one and a half times consumer price inflation, so all the universities had struggled with funding cuts in real terms.
He wrote last month that funding was tied to student numbers, forcing cuts in areas like education, where teacher trainees have dropped by 39 per cent since 2010, and languages, where "the proportion of secondary students studying a language is the lowest for a century".
McCutcheon originally studied animal physiology at Massey University and spent much of his early career there, becoming head of animal science in 1990 and deputy vice-chancellor in 1999.
His research interests included how biological processes such as foetal and neonatal growth and lactation are regulated.
He was vice-chancellor of Victoria University from 2000 to 2004 before moving to Auckland.
Although he is the longest-serving current vice-chancellor of a New Zealand university, his 15 years will still be less than 24 years served by one of his predecessors Sir Colin Maiden, who held the job from 1971 to 1994.