CEO Asoka Woehrmann is set to step down over claims that the company, one of the world's leading asset managers, exaggerated the sustainability credentials of some of its financial products.
DWS has denied any wrongdoing.
In a statement, Woehrmann said: "After the three most successful years in its history, DWS is significantly more profitable, is stable and has continued to perform well in a difficult market environment.
"At the same time, the allegations made against DWS and myself in past months have become a burden for the company, as well as for my family and me," he added. "In order to protect the institution and those closest to me, I would like to clear the way for a fresh start."
Woehrmann is set to step down after the DWS's annual general meeting on 9 June. He will be replaced by Stefan Hoops, who currently oversees Deutsche Bank's corporate and commercial client activities.
Around 50 investigators searched the offices of DWS and Deutsche Bank on Tuesday as part of their probe, according to prosecutors in Frankfurt.
The raids were triggered by a former executive Desiree Fixler, who claimed that DWS had engaged in “greenwashing” by exaggerating the environmental and climate credentials of certain funds it sold.
As reported by the Financial Times, Fixler said the company made misleading statements in its 2020 annual report surrounding claims that more than half the group’s $900bn assets were invested using environmental, social and governance criteria.
Tuesday's search involved public prosecutors from Frankfurt, federal police and officials from the German financial regulator, BaFin.
Prosecutors said initial investigations showed there were sufficient indications that environmental, social, and governance criteria were not considered in a majority of the funds featured in the company's sales brochures.
Deutsche Bank said Tuesday that the actions taken by prosecutors were “directed against unknown people in connection with greenwashing allegations against DWS.
“DWS said that they have continuously cooperated fully with all relevant regulators and authorities on this matter and will continue to do so," the bank said Tuesday.
The German financial giant Deutsche Bank holds an 80 per cent stake in DWS.