Speaking to people in a live televised address on Monday, Diab first blamed the explosion on mismanagement resulting from “endemic corruption” in the country, Press TV reported.
Elsewhere in his remarks, Diab slammed certain corrupt political actors for undermining his government's efforts by distorting truth.
“Today we follow the will of the people in their demand to hold accountable those responsible for the disaster that has been in hiding for seven years, and their desire for real change," Diab said, adding, "In the face of this reality ... I am announcing today the resignation of this government.
"May God save Lebanon, may God save Lebanon, may God save Lebanon.”
He said his government "tried to create change to meet demands of the Lebanese people, adding, "We are with the people in calling for trying those responsible for this crime."
Diab also denounced those who are trying to take advantage of the Beirut blast for their own political gain.
After months of a power vacuum in the small Mediterranean country, Diab's cabinet formed in January to combat alleged corruption and mismanagement, and to revive Lebanon’s collapsed economy.
Before Diab announced the government's resignation, four cabinet ministers had already quit their posts.
The tragic explosion caused by detonation of more than 2,000 tons of ammonium nitrate in a port warehouse has so far killed more than 200 citizense and injured more than 6000 others.
The explosion is believed to have been caused by a fire that ignited a 2,750-ton stockpile of highly volatile ammonium nitrate. The material had been stored at the port since 2013 with few safeguards despite numerous warnings of the danger, Al-Jazeera reported.