There has been speculation over Mr Bailey's frontbench future after premier Annastacia Palaszczuk's shock resignation on Sunday.
Incoming premier Steven Miles had flagged cabinet changes when he officially takes over the reins following Friday's caucus meeting in Brisbane.
Mr Bailey's future appeared uncertain with Mr Miles this week refusing to be drawn on questions about whether the transport minister would remain in his role.
However Mr Bailey ended the speculation on Wednesday afternoon by releasing a short statement on social media.
"It is has been the honour and privilege of my life to serve for nearly nine years as a Palaszczuk Labor Government Minister including six years as the longest serving transport minister since the 1980s," he posted on Facebook.
"With a new premier looking to renew the ministry, it is time for me to step aside from cabinet and support the promotion of one of our many talented younger Labor MPs.
"I thank Annastacia Palaszczuk and all my caucus colleagues for their tremendous support since 2015."
Mr Bailey said he fully supported Mr Miles and would stay on to re-contest his seat of Miller in Brisbane's south at the October 2024 state election.
"I look forward to having more time to work hard for my Miller constituents as their local MP," he said.
"I wish Premier-Elect Steven Miles and the new Cabinet my sincere best wishes and they have my 100 per cent support.
When asked about cabinet changes, Mr Miles this week would only confirm Cameron Dick would remain as Treasurer and also step up as deputy premier, with Shannon Fentiman also staying on as health minister.
The path was cleared for Mr Miles to become Queensland's 40th premier when Ms Fentiman ended her leadership tilt on Tuesday, barely 12 hours after putting her hand up for the role.
She withdrew her bid, saying it was clear Mr Miles had the support to become the next premier ahead of Friday's caucus amid speculation that a backroom deal with unions sealed her fate.
Ms Palaszczuk will formally tender her resignation to Queensland Governor Jeannette Young on Friday with Mr Miles set to be sworn in.
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