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Former Post Office boss Paula Vennells is handing back her CBE with immediate effect after facing mounting pressure over the Horizon IT scandal.
More than 700 sub-postmasters were prosecuted based on information from faulty software.
Some people went to prison for false accounting and theft, while many were financially ruined.
It comes after a petition calling for her to hand back her CBE exceeded a million signatures.
In a statement issued to the PA news agency, she said she had “listened” to the sub-postmasters and others calling for her to return her CBE.
“I am truly sorry for the devastation caused to the sub-postmasters and their families, whose lives were torn apart by being wrongly accused and wrongly prosecuted as a result of the Horizon system.”
Ms Vennells has long faced questions over her role in the scandal, which has been described as one of the most widespread miscarriages of justice the UK has seen.
She was Post Office chief executive between 2012 and 2019, and received the CBE for services to the Post Office and to charity.
More than 700 Post Office branch owner-operators were wrongly prosecuted for theft, fraud and false accounting between 1999 and 2015 on the basis of faulty information from Horizon software.
Many victims of the scandal – which began in 1999 – are still fighting to have their convictions overturned or to secure full compensation after being forced to pay out thousands of pounds of their own money for shortfalls that were caused by Horizon accounting software.
Jo Hamilton, a former subpostmistress who was wrongly convicted in 2008 of stealing thousands of pounds from a village shop in Hampshire, said she was glad Ms Vennells had agreed to return the honour.
“It’s a shame it took just a million people to cripple her conscience,” she said.
Varchas Patel, whose father Vipin was wrongfully convicted of fraud in 2011 after being accused of stealing £75,000 from his Post Office branch in Oxford, said Ms Vennells did not deserve her honour.
Mr Patel told the PA news agency: “My initial reaction is good, I’m glad. She doesn’t deserve that CBE, she never did deserve that CBE.”
Ms Vennells joined the Post Office in 2007, and was promoted to the position of chief executive in 2012.
She held the top job until February 2019, when she stepped down. During her tenure, the company repeatedly denied there were problems with its IT system, Horizon.
A government source told PA news agency that Ms Vennells agreeing to hand back her CBE was “the right thing to do”.
Downing Street previously said that Prime Minister Rishi Sunak would “strongly support” the Honours Forfeiture Committee if it decided to look at stripping that award.
Until 2012, the Post Office was part of Royal Mail before it was split off. Between 2003 and 2010, Adam Crozier was chief executive of Royal Mail. He went on to lead ITV and is now chairman of BT.
He was replaced by Dame Moya Greene who ran Royal Mail for eight years, during which time the company was privatised and listed on the London Stock Exchange in 2013.
On Tuesday Justice Secretary Alex Chalk said the idea of using legislation to quash convictions of all Post Office workers caught up in the scandal was under “active consideration”.
In the Commons on Tuesday, former minister Nadhim Zahawi – who made an appearance playing himself in the recent ITV drama Mr Bates vs the Post Office – called for a “simple bill” to quash all the remaining convictions based on “bad data”.
“Until those convictions are overturned the victims cannot claim compensation,” Mr Zahawi said.
In response, Mr Chalk said the issue was “an appalling injustice” and Mr Zahawi’s suggestion was “receiving active consideration”.
Other senior figures to call for legislation to speed up the process of overturning the convictions include Labour peer Lord Falconer, who was justice secretary under Tony Blair, and former Conservative Justice Secretary Sir Robert Buckland.
However, others have disagreed, including former attorney general Dominic Grieve who told the BBC that it would amount to “parliamentary interference in the judicial process”.
Instead, he said each case “ought to be considered on its own merits”, and sent to the Criminal Cases Review Commission (CCRC), which investigates alleged miscarriages of justice.
The scandal has been described as the most widespread miscarriage of justice in British history, but to date only 93 convictions have been overturned and of them, just 30 people have agreed “full and final” compensation settlements, meaning many victims are still fighting to clear their names.
Some 54 cases have resulted in either a conviction being upheld, people being refused permission to appeal, or the person appealing having withdrawn from the process.
While the scandal has been public knowledge for some time with a public inquiry ongoing, an ITV drama – Mr Bates vs The Post Office – which aired last week thrust the issue back into the spotlight.