Her resignation as party leader comes the same day as poll results showed her leadership does not have the support of Islanders, remaining stuck around 20 per cent, despite less than impressive results for the ruling Liberal party.
Crane said she will be staying on as an MLA, and will run again in the next election.
She said she is proud of the work she has done.
Crane has been Opposition leader since September 2007. She survived a vote in early November at the Tory's annual convention to have her leadership reviewed . That review would have been at the AGM in 2013, but the motion was defeated by a vote of 384-342.
She said at that time if she believed she was standing in the way of the future of the party she would step aside of her own accord.
"I told my party during two Annual General meetings that I would always put the interests of the Progressive Conservative party first, and that I would not hesitate to step down," Crane said in a news release Wednesday.
Five years as leader
Crane took over the leadership following a surprising defeat for the party in 2007. Premier Pat Binns was widely expected to win a fourth mandate, but the party faltered during the campaign and retained just four seats. That fell to three with Binns's resignation as an MLA. One of those seats left in the house belonged to Olive Crane.
Crane was appointed interim leader less than two years after entering politics.
The party took its time organizing the election of a permanent leader. Crane faced a difficult battle for the job, facing off against a former cabinet minister from the Binns government. In electing Crane, the party seemed to be choosing a complete break from its past.
By the time Crane faced her first election as leader in October 2011, she was the only PC MLA left from the Binns era.
The party failed to bump Premier Robert Ghiz out of office after just one term, but increased its number of seats to five.
Questions about her leadership plagued her, culminating in the November vote.
Polling numbers for Crane's leadership have never been strong, bouncing around the 25 per cent mark. The poll released Wednesday was a continuation of that trend.