James B. Milliken, the chancellor of the City University of New York, the largest public urban university system in the country, announced Tuesday that he would step down at the end of the academic year.

Mr. Milliken’s decision comes eight months after he announced that he had been diagnosed with throat cancer, and that he would be undergoing treatment that require him to limit his duties. In his letter to the CUNY community Tuesday announcing his decision to step down, Mr. Milliken, 60, said that while his prognosis was good, “there is no denying that the last nine months have been draining physically and emotionally.”

Mr. Milliken, a lawyer by training, said in an interview that he plans to remain at CUNY, as a law professor.

The search for a successor is expected to begin in January, with the expectation that a new chancellor would be in place for the 2018-2019 academic year, Mr. Milliken’s letter said.

Mr. Milliken was appointed in 2014 after a long run as president of the University of Nebraska, his alma mater. During his tenure, he has helped CUNY’s community colleges improve their graduation rates and redoubled efforts to insure that the university remains a premier engine of upward mobility.

But that mission has been made more difficult by the fact that many states, including New York, have been cutting spending on public higher education while tuition has been climbing. At CUNY, the lack of funding has contributed to deteriorating facilities and overcrowded classrooms, most obviously at its flagship campus, City College, in Harlem.

City College’s president, Lisa S. Coico, stepped down amid a financial scandal last year and a permanent replacement has yet to be appointed.