Justice Minister Kiri Allan has been charged with careless use of a motor vehicle and refusing to accompany a police officer following a car crash.
Allan was taken into police custody after the collision in Wellington on Sunday night.
In a statement, Allan said she would resign from all her portfolios immediately.
Prime Minister Chris Hipkins said he had spoken to her this morning and did not believe she was in a fit state to hold a ministerial warrant. He said he had accepted her resignation.
In a statement, police said they received a report of a crash involving two vehicles on Evans Bay Parade in Roseneath shortly after 9pm.
"One person was taken in to custody and is assisting police with inquiries into the circumstances of the crash.
"The road was blocked for a short time, no injuries are reported."
RNZ has been provided photos taken last night of a Hyundai Kona - a electric car available to ministers - blocking one lane of a road.
Hipkins said Allan was held at Wellington Central Police station following the crash, charged with reckless driving and resisting arrest, and released about 1am.
She had returned a breath test over the legal limit but at a level considered an infringement offence and police did not press charges in relation to that, Hipkins said.
"While her alleged actions are inexcusable, I've been advised she was experiencing extreme emotional distress at the time of the incident. Her recent personal struggles with mental health have been well documented and it appears some of those issues came to a head yesterday.
Hipkins said it was untenable for a justice minister to be charged with criminal offending.
"Kiri agrees, and she's advised me she wishes to resign all her portfolios immediately, is heading home, and taking time to consider her future in politics. I've accepted that resignation.
Police later on Monday confirmed a person was charged with careless use of a motor vehicle and refusing to accompany a police officer following a crash on Evans Bay Parade, and summonsed to appear in court at a later date.
An infringement notice was issued for excess breath alcohol between 250mcg and 400mcg, the statement at 8.40am said.
In a statement, Allan said after taking time off to address a number of personal difficulties she had believed she "was okay to juggle those challenges with the pressure of being a minister".
"My actions yesterday show I wasn't okay, and I've let myself and my colleagues down.
"I accept that my position as a minister is untenable."
The reallocation of Allan's portfolios would be confirmed later today, Hipkins said.
Allan returned to her full ministerial duties on Monday last week after taking some time away from Parliament due in part to a relationship break-up.
While she was taking a few days of mental health leave, separate allegations were reported regarding her treatment of staff, which she strongly denied.
She then took another two weeks off over Parliament's recess.
Prime Minister Chris Hipkins spoke to Allan on 14 July after returning from his trip to Europe and confirmed then she would return to work.
"I'm pleased she is in a much better space after taking some time off and getting some professional support," he said.
"Mental wellbeing should never be a source of shame or embarrassment. I commend Kiri for speaking publicly about her recent struggles and I've been resolutely committed to supporting her through that."
Allan also issued a blanket apology to "anyone who has found my behaviour towards them unacceptable" and Hipkins said she would receive workplace coaching.
Last Monday, Hipkins told reporters he considered the matter closed.
"Kiri gave me some assurances that she feels well, she's in a good space to come back to work, and certainly the conversations I've had with her over the last week or so, the last few days, give me confidence in that."
Speaking to reporters on Tuesday, Allan acknowledged she had gone through "a bit of a rough time".
"I've struggled with my mental health for a good part of my adult life. That's something I try not to shy away from."