Ashrawi, 74, did not give a reason for her resignation in a statement announcing the move. But she said that the PLO's Executive Committee, on which she served, had been marginalized "and from decision-making."
The 15-member committee, the most senior body of the PLO, is headed by Palestinian President Mahmoud Abbas and is not often convened by the 85-year-old leader.
"The Palestinian political system needs renewal and reinvigoration with the inclusion of youth, women and additional qualified professionals," Ashrawi said in her statement, adding that she had tendered her resignation to Abbas.
"I believe it is time to carry out the required reform and to activate the PLO in a manner that restores its standing and role."
In a brief statement, Abbas said he had accepted Ashrawi's resignation.
Critics accuse Abbas of allowing Palestinian political institutions under his authority in the West Bank to stagnate. There have been no presidential or parliamentary elections for the Palestinian Authority, which he heads, for more than a decade.
Ashrawi's negotiating days date back to the earliest public, U.S.-mediated talks with Israel in 1991 at the Madrid Conference, where as PLO spokeswoman she articulated the Palestinian quest for statehood to the world.
Following the signing of the Oslo Accords with Israel in 1993, Ashrawi served in the cabinet of the newly-formed Palestinian Authority, which has limited self-rule in the West Bank.A champion of women's rights, Ashrawi was the first woman elected to the Executive Committee in 2009. She was re-elected to the group in 2018 and has headed its Department of Public Diplomacy and Policy.