Millican said it was time for a new leader to guide the company through its preparations for the next price control period from 2027.
He will continue to lead the state-owned water company until a successor is found, with an appointment process set to launch soon.
Millican, who was previously Scottish Water’s finance and regulation director, has been on the company’s board for two decades.
He said: “It’s an immense privilege to lead Scottish Water, playing a key role for 20 years in the transformation of an organisation that is vital to the health and wellbeing of people, communities, business and the environment across Scotland.
“I am proud of all that we have achieved and the consistent recognition in recent years of our leading levels of performance.
“I am very grateful for the dedicated commitment of our people across Scotland who have continued to deliver exceptional service throughout the pandemic and under frequently challenging weather conditions”.
He added: “After careful consideration, I have decided to announce my intention to step down so that a new chief executive can be appointed who will lead Scottish Water through the extensive preparation needed for the next regulatory period starting in 2027.
“Over the next year, my priority is to lead Scottish Water well, serving our customers while transforming again to meet our future challenges.
The company’s chair, Dame Susan Rice, said Millican had “steered the organisation at a time of greater change and challenge than normal”.
She added: “Scottish Water emerges as an even stronger, more cohesive business, serving its employees, its customers and indeed all people in Scotland at a very high standard.
“An orderly approach to succession is also the hallmark of a well-run business. There will be opportunities over the next year to celebrate Douglas’ significant contribution and success; meanwhile, the board joins me in expressing our gratitude to Douglas for what he has achieved, knowing also that he will continue for now to lead the organisation at pace and with acumen.”