In an email to party members Monday morning, Dabakis said he will spend the coming months "fighting some medical issues," but planned to continue to be a voice for the cause.
Dabakis said he hopes his legacy is making the party an option for Utah Mormons.
"I got a wonderful call from an LDS Church official who called and said, 'Who would have thought it would have been a gay guy who would be the one who would go further in bridging the differences between the Democratic Party and the LDS Church?'" Dabakis said. "I hope that's true in a lot of ways, that we put the Democratic Party back in the conversation as problem-solvers and not as some national punching-bag party. Utah Democrats are different than that."
Former Utah Republican Party Chairman Thomas Wright, who spent two years opposite Dabakis, said Dabakis had a flair that served his party well.
"He has an exciting way of talking about issues … which I think was effective and a good brand for him and I think he elevated the stature of the Democratic Party in Utah," Wright said.
Josie Valdez, the party's vice chairwoman and candidate for lieutenant governor in 2008, will take over the top officer's duties until the state central committee picks a replacement at the Democratic state convention in April to serve the duration of Dabakis' term, which is up next year.
Sen. Gene Davis, D-Salt Lake City, said Dabakis was "one of the great party chairs we've had."
"I think he pulled the party together really well," Davis said. We've got many more caucuses and they're well attended, be it the Hispanic Caucus or the LDS Caucus, I think he's done a great job at doing that and I think he's left the party in better shape financially than it's been in some time."
As he leaves, Dabakis notes that the party has $430,000 in its campaign account, which he said is a record.
Known for his pointed, tongue-in-cheek swipes at the Republican establishment and tea party, Dabakis was particularly outspoken in recent months on the state's defense of its ban on same-sex marriage.
Dabakis, who married his partner of 27 years, Stephen Justesen, last December after a federal judge struck down Utah's marriage ban, took a typical shot at the state's Republican establishment in his farewell email.
"I was going to announce that old political standard: I am quitting for family reasons," Dabakis wrote. "But I [am] not sure that would be legally permissible in Utah."
Wright said he and Dabakis formed a good relationship in their time as chairmen of the opposing parties and he respects anyone willing to take on such a task.
"Jim is a good-hearted gentleman and he has the best of intentions," Wright said. "He believes what he's fighting for and, while I disagree with him on a lot of different policy issues, I always respect the fact he was, one, willing to sit down and have a conversation, and, two, he was respectful about it."
Wright and Dabakis were honorary co-chairmen of the state chapter of Fix The Debt, which was pushing for a solution to the red ink in the federal budget.
Current Utah Republican Party Chairman James Evans called Dabakis an "unfailing advocate" for the Democratic Party.
"I will miss publicly debating him on the issues of the day," Evans said. "He brings a uniqueness and high energy to every debate."
The party was less successful electorally than financially, during Dabakis' three-year tenure. While Democratic Rep. Jim Matheson narrowly held onto his congressional seat in 2012, the party saw its presence in the state Legislature slip even further and the party's statewide candidates failed to pose a major threat.
But Dabakis said that, after the Legislature redistricted or gerrymandered, as he refers to it the legislative seats, and with part-time Utahn Mitt Romney at the top of the ballot driving presidential turnout, he said Democrats fared well.
"I see that as a victory. There's every reason to believe there could have been more losses," he said. "I hope we're really beginning to set the basis to make this a two-party system."
Dabakis said he plans to form a political action committee in the coming months to help candidates.