The board accepted her resignation on Monday, according to chair Martin Komsa.
In a statement, Komsa said "we are truly disheartened with the news and this is certainly the last thing we wanted for the organization but it's the best thing for Sandra so we will accept it, but with great reservations and disappointment."
"To have someone of Sandra's caliber and economic development expertise leave us is not only a great loss to the organization but also to our region," he added.
Komsa and Pupatello both spoke at a news conference held Monday afternoon at the WEEDC offices on California Avenue.
Speaking with reporters on Monday, Pupatello said "it is the right time for me" in terms of her exit from the organization.
Pupatello said she was pleased by the growth she had seen in the WEEDC during her time at its helm and the work that was done.
"I think we took it to a new level," she said. "The best thing that can happen is that the organization continues to get better because that is what happens when you have good leadership and I hope that I had a part to play in setting the tone to not be afraid to go after the big guys and that's what we've done."
In June of last year, Pupatello had signed a three-year deal with the economic development corporation.
Coun. Hilary Payne, who has been critical of the organization, told CBC News that he hopes that "things will maybe change for the better now" with Pupatello's departure.
Payne has been seeking the number of jobs WEEDC has created, along with how many businesses and industries WEEDC has attracted to the region, since Pupatello took over as CEO.
Payne has previously said there needs to be a full-time CEO, more council representation on the corporation's board and more oversight.
While serving as the CEO of WEEDC, Pupatello had held a board position with Hydro One and works at PricewaterhouseCoopers.
She said on many occasions she was dedicating more than enough time to WEEDC.
Payne previously said the corporation is not getting any concrete results for the $2.2-million of public funds that's spent on it annually.
Pupatello previously served four terms as a Liberal MPP in Windsor, and served as a cabinet minister in the government led by former premier Dalton McGuinty.
After leaving politics, Pupatello ended up making a run at the provincial Liberal leadership, but lost to Kathleen Wynne, who became premier as a result.
On Monday, Pupatello said she had not shut the door on political life and had been approached federally.
The federal Liberals have yet to nominate a candidate in the riding of Windsor West, which Pupatello used to represent at the provincial level.
A spokesperson for the federal party told CBC News that a nomination meeting had not been set, though the party has nominated more than 290 candidates across Canada for the pending federal election.