The former state telecoms monopoly said Mr Patterson would stay in the role until a successor is appointed, expected to be some time in the second half of the year.
BT shares, which have lost almost 40 percent of their value since Patterson took over, rose more than 2 percent in early trading, before giving up some of the gains by 1030 GMT. The firm has faced endless criticism for its handling of the UK's broadband infrastructure through its Openreach division too, although Patterson managed to avoid a full break-up of the two companies.
BT announced a restructuring of the business where 13,000 jobs will be cut in a bid to £1.5 billion over the next three years with restructuring costs at £800 million. That led to Mr Patterson losing most of his bonus for 2017.
Neil Wilson, chief market analyst for Markets.com, said: "The expensive move into football rights was a mistake and evidence that management lacked focus under Patterson".
In a statement, BT chairman Jan du Plessis said that while the board was "fully supportive" of the overhaul outlined by Patterson, a change was needed.
The process to appoint a successor is already underway with BT confident it will be in a position to announce a replacement over the coming months as it readies for a period of significant change.
"The broader reaction to our recent results announcement has, though, demonstrated to Gavin and me that there is a need for a change of leadership to deliver this strategy".
"Patterson has paid the price for his losing battle with Ofcom over Openreach, and failure to recognize the investment tide was moving against BT's previous cash flow targets", Guy Peddy, an analyst at Macquarie, wrote in a note.
Patterson has been with the United Kingdom incumbent telco for 14 years, serving as a member of the Board for the last ten.
Investors in BT Group Plc watched their investments shrink about 60 percent and decided it was enough.
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