Washington insiders say he will quit within six to eight months in frustration at their unwillingness to "bang heads together" to get policy pushed through.
Mr Emanuel, 50, enjoys a good working relationship with Mr Obama but they are understood to have reached an understanding that differences over style mean he will serve only half the full four-year term.
His abrasive style has rubbed some people the wrong way, while there has been frustration among Mr Obama's closest advisers that he failed to deliver a smooth ride for the president's legislative that his background promised.
There were sharp differences over health care reform, with Mr Emanuel arguing that public hostility about cost should have forced them into producing a scaled down package. Mr Obama and advisers including David Axelrod, the chief strategist, and Valerie Jarrett, a businesswoman and mentor from Chicago, decided to push through with grander legislation anyway.
One of Washington's more colourful characters, Mr Emanuel is the son of Jewish immigrants and was an accomplished ballet dancer at school. He served in the Israeli Defence Force in the 1991 Gulf War.