Yahya Jammeh has agreed to cede power to new leader, he said in an address on state TV.
He steps down after 22 years in power.
Jammeh's successor Adama Barrow told a press conference, 'the rule of fear is over' as he prepares to return to The Gambian after being sworn in as president in neighbouring Senegal on Thursday and
Gambia's defeated president Yahya Jammeh has agreed to cede power to its new leader Adama Barrow, he said in a state TV address.
"I believe it is not necessary that a single drop of blood be shed," Jammeh said in a brief statement. He promised that "all the issues we currently face will be resolved peacefully."
Barrow was sworn in to office at the Gambian embassy in neighbouring Senegal on Thursday, as pressure increased on Jammeh to peacefully step aside.
Jammeh, who ruled the country for two decades, had been ordered to give up power by midday on Friday by West African leaders or be forced out by regional troops already in the country.
He initially conceded defeat to Barrow, a former north London Argos security guard, in last year's election but made a dramatic u-turn a week later.
The main opposition has said it is unhappy at the offer of asylum for Yahya Jammeh who had refused to step down as president.
Regional troops have secured the presidential palace in the Gambia's capital but there are fears the former leader has raided state coffers.
It ends a political standoff that briefly saw Yahya Jammeh and Adama Barrow claiming leadership of this tiny West African nation.