"Timing is everything in politics. And there's something to be said for going out on top ... leaving the stage while people are still clapping," said Hancock.
"I don't know if they're still clapping," he joked. "But I'm leaving the stage."
Hancock made the announcement at Government House. By his side was his wife, Janet, along with daughters Janis and Janine and grandson Kai. His son Ian was in British Columbia.
Hancock, 59, said his resignation from his Edmonton-Whitemud riding and from the legislature would be finalized in the coming days.
He was picked by the PC caucus in March to become the province's 15th premier after Alison Redford resigned. She quit after her lavish expenses sent the PCs plunging in the polls and dried up her support in caucus.
Prentice, a former Calgary MP, won the party's leadership race last weekend and is expected to be sworn in as the new premier Monday.
He has promised a clean sweep of government to eradicate the spending scandals and to restore integrity and fiscal accountability.
Hancock, an member of the legislature over five elections dating back to 1997, said he had been mulling his future for months, but decided this week he would go.
"The reality is you can't have two premiers," he said. "The new leader has got to be able to take the leadership role, and that means I've got to step out.
"While I'm still passionate about (politics), logic says this is the time (to go)."
He said Prentice's call for party, caucus and government renewal resonated with him.
"You can't refresh and renew unless some of the people who have been there for a while step out.
"I'm the longest-serving cabinet minister in the province and I've been in lots of portfolios, so I'm hardly a new face, although I'm still an agent of change."
What's next? he was asked.
"I have no idea. I haven't been without a job in 45 years. This is a new experience for me. I don't know if I even know how to do a resume."
Well-wishes flowed in from Hanock's fellow members of the legislature and from the opposition side of the house.
"I have always admired the premier’s extensive understanding of public policy, and his passion for issues like education and children’s literacy which have bettered our province," said Prentice in a news release.
NDP Leader Brian Mason said the office of the premier "demands a great deal of time and commitment, and certainly Dave has fulfilled his role admirably."
Liberal Leader Raj Sherman said Hancock helped persuade him to get into politics.
"His argument, put simply, was that those who wish to make a difference have a duty to step up and try to make that difference," said Sherman.
Hancock, a lawyer by profession, has held almost every position with the PCs since, as a teenager, he became inspired by the campaign of Peter Lougheed in 1971.
He was PC youth president, party president, an legislature member, house leader and cabinet minister (in health, education, advanced education, human services, intergovernmental and aboriginal affairs), deputy premier and finally premier.
He ran unsuccessfully to replace former premier Ralph Klein in 2005, but did not run in the leadership race won by Prentice.
He met his future wife while at a PC youth conference election. She worked for his opponent, but when she heard Hancock speak, she marked her X for him.
He won by one vote.
On Friday, in what at times was an emotional speech, he thanked her for more than that.
Hancock's voice broke when he spoke about the steep price the demanding life of politics exacts on loved ones.
"Very few people understand the toll that politics takes on family," he said.
"It's a consuming job — and finding that balance between family and your province is probably the most challenging task."
Then he turned to Janet.
"Love you," he said quietly, but the microphone picked it up anyway.
"Couldn't have done it without you."
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