The long-serving O'Neill had originally planned to leave when his contract ended in late 2013 but his departure has been brought forward to October 31, 2012 after reaching an agreement with the ARU board.
O'Neill, who has spent two terms in the post between 1995-2004 and then again from 2007 until now, is to concentrate on other business interests.
Deputy chief executive Matt Carroll will take over as acting chief executive from November 1 while a "global search" is conducted for a long-term replacement.
ARU chairman Michael Hawker said: "John's workload beyond rugby has recently grown significantly, and unexpectedly, through his chairmanship of Echo Entertainment.
"John had previously indicated he was standing down when his contract ended next year, so the timing of his resignation is now logical for both him and the ARU."
Aside from focussing on his business interests, O'Neill will also serve as an ARU delegate to the International Rugby Board, chairman of the IRB regulations committee and a board member of Rugby World Cup.
"I am honoured during my second term at the ARU to have played a role in shaping the transformation of the game and I look forward to seeing Australian rugby go from strength to strength," O'Neill, 61, said.
"Australian rugby has a rich culture and a proud history, but we have also been working to rapidly modernise and evolve the game.
"I believe the key planks necessary to drive that development are in place, allowing my successor to build on the solid foundations rugby enjoys and take it to the next level of success.
"There are other challenges for me to pursue outside the game now, although my involvement at an IRB and Rugby World Cup Ltd level will ensure I have a strong ongoing connection."