An emotional McMackin made the announcement at a news conference with dozens of stunned players watching on. He met earlier in the day and Sunday night with athletic director Jim Donovan and Chancellor Virginia Hinshaw to discuss his future.
"Hawaii has meant a lot to my family and me," said McMackin, reading off a brief prepared statement without taking questions. "I have decided to retire from my position at this time. I believe in my players and their potential for success."
Associate coach Rich Miano will serve as interim coach until a replacement is selected. A search committee will be formed to launch a nationwide search for a new coach.
The 62-year-old McMackin just completed the fourth year of his five-year contract that pays him a base pay of $1.1 million annually. He will forego $500,000 owed in his final year, "which I hope will help strengthen the UH football program," he said.
"I want to thank my players, my coaches, the staff and the good people of Hawaii," McMackin said. "I wish you well. Mahalo."
McMackin was 29-25 overall at Hawaii, including 0-2 in bowl games, with one winning season in 2010.
The Warriors lost at home Saturday to Brigham Young, 41-20, finishing one win shy of earning an automatic berth to their hometown Hawaii Bowl.
Coming off a 10-win season and a share of the Western Athletic Conference title, Hawaii began this year favored to win the WAC and with high hopes behind its star quarterback Bryant Moniz. But Hawaii was plagued by inconsistency and injuries.
With each loss, calls for McMackin's ouster grew and attendance at home games plummeted. The season started unraveling when Hawaii was blown out by hapless UNLV by 20 points in the third game of the season where the Warriors were favored by nearly three touchdowns.
There were also unfounded allegations that some players may have been involved in point-shaving.
The university said it received an anonymous letter Nov. 3 accusing unnamed players of intentionally playing poorly to affect the final score as part of a gambling scheme. Honolulu police and the NCAA were notified after the university received the letter, but police have said there isn't enough information for a criminal investigation.
The Warriors were 0-7-1 against the spread in their last eight games.
Donovan said McMackin's decision was voluntary and stressed that the coach was not forced to resign.
"The discussion ended up being that he volunteered to retire. It wasn't tied to any one game or even this particular season per se," Donovan said.
He and Hinshaw thanked McMackin for his service, including improving his student-athlete academic progress rates.
"I respect his decision to retire from this position at this time and understand that he continues to think about the best direction for his team now, as he always has," Hinshaw said. "I am grateful for his many contributions and wish him and his family the very best in their future."
McMackin was known by his players as a caring coach who set high goals academically and on the field. However, he made some gaffs along the way.
In 2009, he was suspended for 30 days without pay and volunteered to take a 7 percent pay cut for making a derogatory comment while describing Notre Dame's chant. A tearful McMackin apologized publically.
Shortly after Jones' departure, Hawaii signed McMackin to a five-year deal that increased his base salary by 10 times to $1.1 million annually, making him the highest paid coach in school history.
McMackin also served three years with the San Francisco 49ers as associate head coach and linebackers coach under Dennis Erickson from 2003-05. He has also served as defensive coordinator for the Seattle Seahawks and several college programs including Texas Tech, Miami, Navy, Utah and Idaho.
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