The former ASIO boss and US ambassador, who was earning $5500 a day, resigned from the probe stemming from Australia's deadliest terror attack on Wednesday.
He was originally recruited to run an independent investigation into possible intelligence failures leading up to the Bondi Beach terror attack, but his report was later wrapped into the broader anti-Semitism royal commission.
The esteemed public servant said he was no longer enjoying his work and felt "surplus to requirements".
"I didn't necessarily see my last job of this kind being more of a highly paid researcher," he told reporters in Canberra on Thursday.
"We all enjoy doing things that we think are challenging ... when the challenge is not there, then it's a question of whether you've got much left."
Mr Richardson stressed his departure would not impact the commission's investigation into intelligence services.
Prime Minister Anthony Albanese initially refused to call a royal commission into the nation's worst-ever terror attack at Bondi Beach, instead tapping Mr Richardson to head a review of the adequacy of intelligence and law enforcement agencies before the attack.
After weeks of political pressure, Mr Albanese relented and announced a broader inquiry to be headed by Virginia Bell, a former High Court judge, to investigate anti-Semitism as well as any failures in the nation's intelligence services.
Ms Bell announced Mr Richardson's sudden departure on Wednesday night, as her inquiry prepares for its initial report by the end of April.
"Thanks to Mr Richardson and the senior members of his team ... work on the interim report is well advanced," she said in a statement.
Treasurer Jim Chalmers said he was sad to learn Mr Richardson had quit the probe but had not spoken to him about it.
"I think the world of Dennis Richardson," he told ABC News on Thursday morning.
"He is a person of such immense experience and knowledge, and hopefully we've been able to tap some of that before this development."
In a statement, Attorney-General Michelle Rowland thanked Mr Richardson for his work and said the commission would deliver its interim report by April 30, as scheduled.
Shadow attorney-general Michaelia Cash said the former intelligence boss was a central part of the probe and suggested his resignation could seriously undermine the investigation.
"This is deeply concerning," she said in a statement to AAP.
"Mr Richardson is one of the most respected national security figures Australia has ever had, and his expertise would have been invaluable to the royal commission examining the failures that led to the Bondi massacre."
In announcing Mr Richardson's resignation, Ms Bell thanked him for his contributions and said he was uniquely well-placed to report on intelligence and security agencies' preparedness for a terror attack.
