Mr Lumsden was appointed as the director general in 2008.
He announced today he was leaving the post to focus on his other appointment as chair of the WA Planning Commission, which he has agreed to continue for another three years.
Planning Minister John Day said a recruitment process for a new director general would shortly commence.
He said Mr Lumsden’s decision to stay on at the Planning Commission was a “real win” for the WA planning system.
“I am confident that Mr Lumsden will continue to enthusiastically drive the goals of the (planning) commission forward on behalf of the state government.”