Nujoma had informed the party politburo that he would be stepping down in November, said a statement released by his office on Tuesday.
He wanted Hifikepunye Pohamba, the current president of Namibia, to be the next SWAPO president, the statement added.
Nujoma served as president of Namibia from 1990 to 2005, and was considered the father of the country's liberation struggle.
He was a co-founder of SWAPO in 1960, when it was a liberation movement, and led the party from the beginning.
Pohamba, 72, who succeeded Nujoma as president in March 2005, had been SWAPO vice-president since 2002.