The 68-year-old, a former top class skier who competed in the 1960 Olympics in the slalom, said he was acting on medical advice.
"My doctors advised me against taking long trips abroad," explained Bogner, who will be replaced at the helm by his deputy.
"I just ask for people's understanding, that I prefer to place my health first," added Bogner, who forged a successful career as a clothes designer after retiring from skiing.
The bid committee acknowledged the difficult decision taken by Bogner.
Thomas Bach, president of the German Olympic Committee and a favourite to succeed present International Olympic Committee president Jacques Rogge when he steps down in 2012, paid tribute to Bogner's hard work for the bid.
"Willy Bogner really gave the project momentum and inspired the candidacy," the committee said. "We appreciate fully the work he put in."
Bogner will remain on the committee and retains confidence that Munich can win the right to host the Games and add to their staging of the tragedy-hit 1972 Summer Games.
"I hope that my dream, to see the Olympic Games and Paralympics in my homeland, becomes reality," said Bogner, whose late father was a distinguished Nordic skiier and also clothes designer, who had Hollywood stars Marilyn Monroe and Jayne Mansfield model them.
Bogner's stepping down comes on the back of Bavarian farmers refusing in July to allow their land to be used for the Games.
The IOC will vote in Durban, South Africa, on July 6 next year who wins the right to host the Games - Munich are up against South Korean candidate Pyeongchang, bidding for a third time after two unsuccessful previous attempts, and the French town of Annecy.