The New Yorker's exit comes at a bad time for the Republicans, but staying could have made things worse. A socially conservative incumbent in a socially conservative party, the congressman's personal baggage threatened to further weakened a listing GOP ship.
"This choice was an extremely difficult one, balanced between my dedication to service to our great nation and the need to concentrate on healing the wounds that I have caused to my wife and family," Fossella said in a statement on his congressional Web site.
The 43-year-old Republican has acknowledged fathering a daughter with a Virginia woman, Laura Fay. The two met while she was an Air Force officer working with Congress. He also has a wife and three children.
The lone Republican congressman in New York City, Fossella represents Staten Island and part of Brooklyn.
His departure puts more pressure on Republicans to hold the seat, though it is unclear who will be on the ticket for either party in November.
Republican party officials have already begun searching for a successor.
The district "will vote true to its form in November and will send a Republican representative back to Congress," said Rep. Tom Cole of Oklahoma, who heads the National Republican Campaign Committee. He said the committee will be "working quickly" to sign up a Republican contender.
The local district attorney, Daniel Donovan, is an early favorite for the Republicans - particularly since voters might welcome a law-and-order candidate as an antidote to Fossella's foibles.
Before the scandal, Democrats mounted a surprisingly tough challenge to Fossella in 2006.
The departure of Fossella "only provides a stronger opportunity for Democrats to pick up the seat," said Democratic Congressional Campaign Committee spokeswoman Carrie James.
Party leaders have already spoken privately with a handful of potential candidates seeking the seat, though it is unclear how many will emerge as full-fledged candidates from that process.
Fossella's secret relationship was revealed after he was arrested in Virginia on May 1 on charges of drunken driving.
The disclosure was a crippling blow to the career of a lawmaker once viewed a potential candidate for mayor of New York City.
While he found little support among national party leaders, some on Staten Island who had openly encouraged him to stay.
"Despite the personal mistakes I have made, I am touched by the outpouring of support and encouragement I have received from so many people," Fossella said, adding: "I believe this course of action is best for my family and our community."
When he was arrested, he called Fay to get him out of jail. She is a former Air Force lieutenant colonel and worked for a time as a liaison to Congress.
After his arrest, police said Fossella's blood-alcohol level was twice the legal limit, and he could face a mandatory five days in jail if convicted. A court appearance on the drunken driving arrest is scheduled for next month.
Fossella was elected to Congress in 1997 in a special election to replace Rep. Susan Molinari, who resigned. In the years since, his positions, particularly on social issues like abortion and gay marriage, squared nicely with his largely Catholic district. He serves as a member of the House Committee on Energy and Commerce.
His work in Congress shifted dramatically following the Sept. 11, 2001, terror attacks.
Hundreds of Staten Island residents died in the attacks, and Fossella became a prominent advocate for families of those killed.
As more recovery and rescue workers got sick after toiling at the ground zero site, Fossella pushed for Washington to pay for their health care - an effort that has met with short-term success, but no long-term program.