Johnston said the recent death of his wife Joanne prompted the decision to retire from all active duties at the club.
He will now step down as director and company secretary of Kilmarnock as well as resigning from the board of the Kilmarnock Community Sports Trust on which he represented the club.
Johnston became a director in 2002 and served as chairman for ten years between 2005 and 2015 during which time the club won the League Cup in 2012.
However, his reign has been divisive, and there has been a long-running campaign by sections of the supporter to oust him.
Johnston said: “It has been an honour to serve Kilmarnock FC in various capacities over the last 15 years.
“There have been many challenges to confront along the way and these have taken their toll on not only me but also my family, to whom I extend my heartfelt thanks for their unqualified support.
“The recent loss of my wife Joanne, who was my greatest source of inspiration and encouragement at all times, has prompted my decision to retire from all active duties at the club and I look forward to attending Rugby Park as a committed supporter in future, unburdened of the worries of the past.”
A statement from the club praised Johnston for the way he restructured Kilmarnock’s finances.
It read: “When Michael took over as chairman and majority shareholder the club had around £13m of debt. Aided by a number of high value transfer fees which he personally negotiated, Michael gradually reduced this while maintaining the club’s competitive position in the top tier of Scottish league football.
“In March 2014 Michael completed a transformational restructuring of the club’s finances which delivered the arm’s length sale of the Park Hotel for full market value, with the proceeds going towards reducing the club’s bank debt of £9m and Billy Bowie acquiring the balance of the bank debt and converting this into equity in the club, combined with the permanent write-off by former Ccairman Jamie Moffat of the balance of his loans to the club, which originally totalled £1.8m.
“The outcome was the elimination of almost £11m of debt from the club’s balance sheet.”
Kilmarnock’s win over Inveress last weekend secured their place in next season’s Premiership but the club have yet to confirm caretaker boss Lee McCulloch as permanent manager.