The prime minister is facing an angry backlash from Brexit-supporting MPs when she addresses the House of Commons on Monday, before a meeting of the 1922 Committee of Tory backbenchers, in an attempt to get them behind the plans.
Conservative MP Peter Bone hailed Mr Davis' resignation as a "principled and courageous decision", adding: "The PM's proposals for a Brexit in name only are not acceptable". May's office confirmed that Davis had resigned but had no comment yet on the reasons.
In his resignation letter, Mr Davis said he could no longer be an "reluctant conscript" to the Prime Minister's strategy on leaving the EU.
Conservative MP Peter Bone said Mr Davis had "done the right thing", adding: "The PM's proposals for a Brexit in name only are not acceptable".
Ian Lavery, chair of the Labour Party, said: "This is absolute chaos and Theresa May has no authority left".
Mr Davis had come close to resigning before, but Mrs May must have hoped the danger of Cabinet resignations had passed after Friday's deal at her official country retreat.
"The general direction of policy will leave us in at best a weak negotiating position and possible an inescapable one", he wrote, adding: "The inevitable effect of the proposed policies will be to make the supposed control by Parliament illusory rather than real".
Opposition lawmakers, meanwhile, said that this was a big blow for the prime minister.
Less than nine months remain until Britain leaves the bloc on March 29, 2019.
As the minister responsible for the Brexit negotiations, Davis is a major voice in the debate in the UK.
Davis' resignation was also accompanied by the resignation of his deputy, Brexit minister Steve Baker, and another Brexit minister Suella Braverman has also reportedly resigned.
In his resignation letter, Mr Davis criticised the PM's Brexit plan - agreed by the cabinet on Friday - saying it would leave Parliament with "at best a weak negotiating position". His role as Brexit Secretary was crucial to ensuring Britain leaves the European Union next year with what Mrs May described as the "best possible deal".
Mrs May will have a key meeting with members of her Tory party to discuss her plan in Parliament on Monday.
His departure could embolden Brexit-supporting Conservative lawmakers - who have long considered May too prone to compromise with the European Union - to challenge her leadership.
Foreign Secretary Boris Johnson backed the proposals at Chequers, despite claiming that defending the plans was like "polishing a turd" during the meeting.
Theresa May has ten days to convince the European Union that her Brexit plan will not destroy its single market or open a floodgate to cheap imports or counterfeit goods.
An analysis of the Chequers deal circulating within the pro-Brexit European Research Group of MPs was damning about the plan, saying it would lead to "a worst-of-all-worlds "black hole" Brexit where the United Kingdom is stuck permanently as a vassal state in the EU's legal and regulatory tar pit".
"All those of us who believe that we want to execute a proper Brexit, and one that is the best deal for Britain, have an opportunity now to get behind the prime minister in order to negotiate that deal", he told the BBC.