https://www.bbc.com/news/world-us-canada-45802828
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He told reporters in the Oval Office that she would be leaving the post at the end of the year after doing "an incredible job".
Joined by the former South Carolina governor in the Oval Office, he invited her to come back in a different role. "You can have your pick," he said.
Mrs Haley was confirmed as US envoy to the UN in January 2017.
Mr Trump said Mrs Haley had told him six months ago she wanted to take some time off.
She told reporters that despite speculation, she was not planning to run for president in 2020 and would be campaigning for Mr Trump, who has already announced his re-election bid.
"Thank you, Mr President. It has been an honour of a lifetime," she said alongside Mr Trump.
The president said Mrs Haley "has been very special to me, she has done an incredible job she is a fantastic person very importantly but she is also somebody that gets it".
He said of her role at the UN: "She got to know the players. She got to know China, India, everybody.
"And they like her. And maybe more importantly, they respect her."
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