The 33-year-old has cited a combination of work commitments and competition for places for his decision.
He was the only non-full-time professional cricketer in the squad for the recent tour to the United Arab Emirates to play Afghanistan. And work commitments, coupled with an increasing playing workload for the national team, mean he is unable to commit to all the games throughout the season.
With a number of new players forcing their way into the national squad, Drummond also acknowledges competition for places for the one-day internationals will be fierce, especially among the seam bowlers.
He said: "It's been an unbelievable experience having had the opportunity to captain Scotland and the Saltires. I have given it my all and feel I have done my best to keep the squad moving forward.
"However my professional life and playing situation mean that I feel it's time to pass the leadership on to someone else. I want to continue to play as long as I can and will be working hard to maintain my place in the team and achieve the goals set out by this current squad."
Drummond took over the captaincy from Gavin Hamilton in 2010. Scotland's head coach Peter Steindl said: "Gordon has led his country with distinction on every occasion he has captained Scotland. He has been a fantastic role model and excellent leader, working tirelessly to create an effective environment during a time of change.
"Much of this work has been done selflessly and behind the scenes in a manner that has always matched his philosophy that the team always comes first. I am pleased that Gordon has decided to play on as he will continue to have a positive influence in the dressing room."
Chief executive of Cricket Scotland Roddy Smith said: "Although we are disappointed that Gordon has decided to step down, he has done so for reasons that are in the best interest of the team, a measure of the man.
"I would like to thank him on behalf of Cricket Scotland for all his efforts and commitment during his period as captain and we all look forward to seeing him pull on the Scottish shirt as a member of the side during this year and beyond."
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