Lithuanian President Gitanas Nauseda announced Paluckas' resignation to the media on Thursday morning.
A spokesperson for Paluckas did not immediately respond to a request for comment.
Paluckas, a newly established leader of the centre-left Social Democrats, rose to the role in late 2024 after a three-party coalition formed following parliamentary elections in October.
His entire cabinet is now expected also to resign, potentially leaving the country without an effective government weeks before Russia holds joint military exercises with neighbouring Belarus.
Lithuanian foreign policy is unlikely to change as a result of the government shake-up.
Nauseda, who was elected separately, is the country's face on the world stage and has been one of the most stalwart supporters of Ukraine in its fight against invading Russian forces.
Paluckas has recently been dogged by media investigations into his business and financial dealings.
Several media outlets published investigations in July regarding Paluckas' past and present ventures and alleged mishandlings, including ones more than a decade ago.
The Baltic country's anti-corruption and law enforcement agencies subsequently launched their own probes.
In a devastating blow to his reputation, the media also revealed that Paluckas never paid a significant part of a 16,500-euro ($A29,000) fine in connection with a 2012 criminal case dubbed the "rat poison scandal".
Paluckas was convicted of mishandling the bidding process for Vilnius's rat extermination services while serving as the capital city's municipality administration director.
Judges for the country's top court in 2012 ruled that he abused his official position by illegally granting privileges to the company that offered the highest price in the bid.
He was also sentenced to two years behind bars, but the sentence was suspended for one year and he ultimately was never imprisoned.
The Social Democratic party leader denied any wrongdoing regarding his business affairs, labelling the criticism as part of a "co-ordinated attack" by political opponents.
He resigned before the opposition could formally launch impeachment proceedings.
New coalition talks are expected to start shortly to form a new cabinet.
