Bennett, who has been at the Old Trafford home since February 1987, has made the decision because of the increasing demands of his position as Chairman of the England Management Committee.
``The extra workload following my appointment as chairman of EMAC has created circumstances under which I am no longer able to fulfil the role as chairman of the club in a manner which would satisfy my own aspirations,'' he said today from The Oval.
``I am proud to have been involved during a time when the club has taken enormous strides forward - both commercially and on the field of play.''
Bennett, who had retired from the committee when he moved to the Isle of Man in 1985, was co-opted back in early 1987 to take over as chairman from Cedric Rhoades.
In his first season, captain David Hughes and coach Alan Ormerod took Lancashire to second in the championship.
Although that is the closest they have come to the Holy Grail, they have enjoyed unprecedented success in the one-day competitions, doing the Lord's double in both 1990 and 1996.
The hand-over will happen at the next AGM, in February, although Bennett is expected to stay on the committee.