Officially, Ive is leaving to pursue "personal projects" and "will continue to work closely" with Apple "on a range of projects." He just will not be an employee of Apple, and instead will have his own design company. According to The Wall Street Journal, however, there was plenty of "internal drama" that led to this conclusion.
The report describes a strong relationship that existed between Ive and Jobs before the latter passed away, with the two often eating together, working together, and socializing after hours. Things changed when Cook came into power. Cook and other high level execs transformed Apple into a "more operations-focused company" than it had been when Jobs was in charge, according to the report.
It also states that Ives "grew frustrated" with Apple's board becoming increasingly populated with people who have backgrounds in finance and operations. In contrast, Ive is a design and technology guy, much like Jobs was when he was alive.
According to the report, the launch of the Apple Watch underscores the divide that grew over time—Ive envisioned it as a fashion accessory, whereas Cook and company saw it as an extension of the iPhone. This difference in vision is emblematic of the rift.
As time went on, Ive began working remotely and met less frequently with other execs. This is according to both WSJ and a recent report by Bloomberg. Both describe an individual who had become worn out and tired over the years.
I'm not sure how much of all this is true versus sensationalized Apple reporting, especially since Ive will still help the company design products, just now on his own. Either way, it will be interesting to see what direction Apple's future products take.