Her resignation as leader takes effect Jan. 30.
Crane, 55, became interim leader of the party in September 2007 and was chosen as full-time leader in October 2010.
In a statement, Crane says it was a difficult decision to step down, but believes it is in the best interests of the party.
She will continue to serve as the member for the riding of Morell-Mermaid.
There are five Tories and 22 Liberals in the provincial legislature.
Before getting elected to the legislature in March 2006, Crane was director of the province's Department of Social Services.
At the party's annual convention in November, the Conservatives narrowly rejected a motion that would have seen a review of Crane's leadership next year.