Susan Parsonage, who joined the council in July 2016, will be moving on to take up the role of permanent chief executive for Wokingham Borough Council.
The council said Ms Parsonage has led a number of transformative projects while at the helm, from helping improve frontline services in the face of austerity, to launching the largest place marketing initiative the district has ever seen.
A spokesperson added that her legacy will include the council’s ambitious plans for the district over the next four years, the multi-million pound Canal Quarter project and the planned creation of the UK’s second Eden Project in Morecambe.
Announcing her departure, Ms Parsonage said: “During my time at Lancaster we have built a strong foundation for future growth, including strengthening our team, refocusing our services, evolving our marketing, improving our operations, reducing our costs and forging many new partnerships.
“I share a love and respect for this great district and have been privileged to work alongside some amazing people and organisations.
“I wish all staff every success in the future and look forward to seeing the many projects and plans now in place come to fruition during the coming years - I plan to return as a visitor and enjoy all that the district has to offer.”
Council leader Eileen Blamire thanked Susan for her dedication and transformational changes and said she was leaving a council which was “looking forward to embracing the challenges of the future”.
She said Susan had brought tremendous enthusiasm to the council, and had introduced a fresh style of management which had reinvigorated and inspired staff and residents alike.
Coun Blamire, who will not be standing for re-election herself in May 2019, added: “We wish her all the best for her next role, and every success for the future.”
The council spokesman said that plans will now be made for filling the role of chief executive to ensure continuity and putting the priorities of the council first.