Powell, a Cairo-born, Dallas-raised former executive at Goldman Sachs, first joined Trump's team after advising his daughter Ivanka on women's empowerment issues. She moved to the National Security Council in March.
Powell, the officials told CNN, is leaving the administration on good terms with the President, unlike other officials who have either resigned or been fired. She decided to leave the job after a year.
Powell's departure could be the first of many to come.
Officials have long expected that some Trump aides will leave the White House in January, a year after the President took office. It is traditional for administrations to experience a spate of departures after the first year in office, but Trump's year has been particularly bruising, leaving some officials preparing for more departures than usual.
National security adviser H.R. McMaster said in a statement that Powell has become "an invaluable member of President Trump's team."
"She is one of the most talented and effective leaders with whom I have ever served," McMaster said. "All of us look forward to continuing to work with her, as she continues to support this administration's efforts on Middle East peace and other issues."
Powell spent the bulk of her time at the National Security Council focused on Middle East peace, working closely with Trump top aide and son-in-law Jared Kushner on building relationships with leaders in the region. She also worked with other national security officials to develop the administration's strategy.
Kushner said on Friday that Powell "has done a great job for the administration and has been a valued member of the Israeli-Palestinian peace team."
He added: "She will continue to play a key role in our peace efforts and we will share more details on that in the future."
Powell plans to move back to New York, where her family lives.
A source inside the White House said Powell has been quietly hoping that Secretary of State Rex Tillerson would leave so US Ambassador to the United Nations Nikki Haley would take over the State Department and she could assume Haley's current job.
White House press secretary Sarah Sanders described Powell as a "key, trusted adviser" to the President.
"She has always planned to serve one year before returning home to New York, where she will continue to support the President's agenda and work on Middle East policy," Sanders said. "She will serve in the administration until early next year."
Powell was brought onto the National Security Council in March to work as an interlocutor between the White House, the Pentagon and the State Department.
She came to the Trump administration with a lengthy resume in Washington.
Powell, at 29, was the youngest ever assistant to the President for presidential personnel, heading up all of the George W. Bush White House's decisions on appointments. Afterward, Powell worked as assistant secretary of state for educational and cultural affairs under President Bush, and traveled extensively with then-Secretary of State Condoleezza Rice.