That comes as a blow to Premier Christy Clark, since Falcon is the seventh and highest ranking Liberal MLA to announce he is not running in the upcoming election. Education Minister George Abbott is expected to announce his plans for the future in the coming days as well.
Falcon said that he told Clark on Wednesday morning that he would be stepping down from both his cabinet posts immediately, but would stay on as an MLA for Surrey-Cloverdale until the end of his term.
He said it was a difficult decision, but he and his wife are expecting their second child in February 2013, and that played a role in his decision.
"Those familiar with the role of a minister of finance know that the lead up to a budget and its delivery in February, is a time of great stress and pressure. I am looking forward to participating in this exciting event, unburdened by the demands of the office," Falcon said.
"Part of the reason why I decided I wanted to do it now is...I wanted to make sure that the premier and government have a clear path in the fall, to ensure that my decision is not going to be a decision which is going to cloud or distract from what I know is a very positive agenda," he said.
Right wing support
Following his announcement Premier Christy Clark announced she was appointing Justice Minister Shirley Bond as acting finance minister.
"Kevin Falcon has been the hardest working finance minister in the country and I want to thank him for keeping us on strong fiscal footing, with a triple A credit rating despite the worst global recession in generations. He has made a remarkable contribution to our province and his public service is beyond distinction," said a statement released by Clark.
"I know how hard it can be to balance the needs and aspirations of family life while wanting to serve publically. I wish Kevin and his growing family continued success and happiness and thank him for his incredible tenure."
Falcon's resignation will leave a big hole in the government from a political standpoint, and an even bigger hole in the Liberal Party, according to University of Victoria political scientist Michael Prince.
Falcon represents the right wing of the Liberals, bridging the divide between the centrist Clark and those further to the right who might be attracted to the upstart B.C. Conservatives, led by former MP John Cummins.
"His departure today rather dramatically if anything benefits John Cummins and the Conservative Party who can now point to the Liberals having lost a strong connection and voice to the business community."
Falcon indicated he plans to seek work in the private sector in the future.
The outspoken politician entered politics in the late 1990's as a lead organizer for the "Total Recall" campaign that attempted to use B.C.'s recall legislation to recall a number of B.C. NDP MLA's.
He was first elected as the MLA for Surrey-Cloverdale in 2001 and rose through the ranks to become a major player in the Liberal cabinet under former premier Gordon Campbell, whose leadership he praised on Wednesday.
"Gordon Campbell repeatedly made difficult decisions to secure a better province for the next generation. I want to publicly thank him for providing his strong support and backing for numerous projects and causes I had the privilege of leading."
After Campbell's resignation in 2010, Falcon finished second in the B.C. Liberal leadership race to Clark.
But Falcon said losing to Clark, and the party's more recent poor showing in the polls, has nothing to do with his decision not to run again.
"Circumstances — they sometimes do change. In this case they changed for me."