Read more on Pete Rouse from CNN's Ed Henry.
Washington (CNN) -- Veteran Illinois politician Rahm Emanuel -- long known as one of toughest men in American politics -- has stepped down from his powerful position as White House chief of staff, President Barack Obama officially announced Friday.
Emanuel has been temporarily replaced by White House Deputy Chief of Staff Pete Rouse while Obama searches for a long-term replacement.
Emanuel, who held a Chicago congressional seat for six years, is widely expected to run for mayor of his hometown.
The move has been anticipated since Chicago Mayor Richard Daley recently decided not to run for re-election.
Chicago "is the greatest city in the greatest country in the world," Emanuel said. I am "eager to see what I can do ... to make (it) even greater."
Obama, addressing a crowd of White House staffers, heaped praise on both Emanuel and Rouse.
This is a "bittersweet day," he said. After being elected president, "I knew that I needed somebody at my side who I could count on day and night to get the job done," he said. Emanuel "brings an unmatched level of energy and enthusiasm and commitment to every single thing that he does."
He "has exceeded all of my expectations. ... I will miss him dearly."
As for Rouse, Obama said, he's "known as a skillful problem-solver, and the good news for him is that we have plenty of problems to solve."
Rouse served as Obama's chief of staff in the U.S. Senate.
Democratic officials have told CNN that one of the reasons Rouse doesn't want to serve as White House chief of staff on a permanent basis is because he does not enjoy being in the spotlight.
Obama joked that Rouse "has never seen a microphone or a TV camera that he likes."
The list of possible long-term replacements in the mix includes top White House aides Tom Donilon, Phil Schilirro and Ron Klain. Presidential Press Secretary Robert Gibbs said Friday that a final decision is not expected "for several months."
As for Emanuel, two sources who spoke to CNN earlier on the condition of anonymity said he is unlikely to immediately announce his mayoral candidacy this weekend. Advisers said he would prefer to put some distance between his White House exit and the time it will take to line up supporters in Chicago before officially announcing his run.
Candidates for the Chicago mayoral race must gather 12,500 signatures by November 22. The city's February 22 Democratic primary could be very difficult to win given the number of prospective candidates from various factions of the party lining up to run.
Emanuel has also been very sensitive to making sure he leaves the White House in good hands given the critical midterm elections that are fast approaching, as well as other transitions expected to happen after the elections.
As Obama began his remarks, he noted that the announcement had been one of the worst-kept secrets in Washington.
"Welcome to the least suspenseful announcement of all time," he joked.
CNN's Ed Henry, John King and Tom Cohen contributed to this report