Credits: ANDRE FORGET/QMI AGENCY
"In June of 2011, I wrote a character reference letter to the Tax Court of Canada on behalf of an individual to whom my constituency staff was providing casework assistance on a Canada Revenue Agency matter," Duncan said in a Friday statement.
"While the letter was written with honourable intentions, I realize that it was not appropriate for me, as a minister of the Crown, to write to the Tax Court."
Duncan said he offered his resignation to Prime Minister Stephen Harper, "which he accepted."
"I would like to thank Mr. Duncan for his many contributions as minister and for his service to the people of Canada," Harper said in a statement.
Heritage Minister James Moore will act as aboriginal affairs minister until a successor to Duncan is named.
Duncan will continue to serve as an MP for Vancouver Island North.
During his tenure as aboriginal affairs minister, Duncan was often criticized by opposition MPs for his handling of the file, particularly during the Attawapiskat housing crisis and through the Idle No More First Nations movement.
Duncan underwent heart surgery last winter but political staffers said his health has since improved.
The NDP said Duncan's departure from cabinet showed he took "responsibility for his actions" but it stressed the immediacy of finding a replacement.
"The prime minister must move quickly to replace Mr. Duncan with a full-time Minister," said NDP aboriginal affairs critic Jean Crowder.