The Very Rev Dr Trevor James said one reason for his retirement was "a realisation and an appreciation that things are changing in the diocese".
"It probably will be helpful for me and for others if I move on.
"We’ve got so many parishes in the city, and I think there’s a real question of rationalisation that needs to happen.
"There’s a systemic problem with so many churches and so few people."
Dr James talked last year of a "crisis of faith", and the need to reduce the number of parishes, and he said nothing had changed in a time when "Christianity is not exactly fashionable".
"It’s probably really good that I’m out of the way and it can evolve in the way that those who are going to take responsibility for it can be around."
He said there was a "desperate need" for a rethink about the issues.
Dr James’ retirement was announced this week in an email by Anglican Bishop of Dunedin the Rt Rev Dr Steven Benford, who said he would act as dean in the short term.
Dr Benford, who could not be contacted yesterday, said in the announcement the next few weeks would be ones of uncertainty for the cathedral, as it would be for other city churches.
He would meet cathedral wardens and staff "to look at the current situation".
Dr James began in the role in 2008.
He said the role of dean was "the most interesting job in the church".
The cathedral was a place where the "theology of the world and of politics is played out".
He pointed to the 2012 asset sales debate held at the cathedral, which he described as "a place of truth telling", as an example.
Of his time in the role, Dr James said the visit of the Duke and Duchess of Cambridge to the cathedral in 2014 had been "a very dramatic event".
"If we could fill up the cathedral like that every Sunday, it would be just simply wonderful."
But one of the highlights of his time was when the Occupy movement took over the Octagon in 2011.
The cathedral made facilities such as its toilets and kitchens available to the protesters.
"There was this lovely contrast between the cathedral, that looks like an establishment set-up, and we’re actually supporting the folk in the Octagon.
"That’s the radical element that I think is quite lovely in our faith."
In his retirement he planned to write, and walk his dog, carrying binoculars with him to do some bird watching while he did the latter.
Dr James, who has written extensively on New Zealand and commonwealth literature and English literature of the 17th century, wrote crime stories and had unfinished novels he would either finish or start again.
He said retirement for a priest was saying to God "what have you got in store for me now? What are you doing with me now?".
Dr James said his understanding of God had "grown immeasurably" during his life.
The likes of quantum physics had shown him "why at an instinctive level you have a hunch that God is more than you imagined".
His faith had "absolutely" included periods of doubt.
"There’s no faith without doubt.
"Doubt is the prerequisite for faith.
"You got to be able to have this rather anxious conversation."
Dr James said he would be having a "liturgical farewell" at the cathedral in spring.
