Modhwadia, seeking a third consecutive term from Porbandar constituency, was defeated by his Bharatiya Janata Party rival Babu Bokhiria by a margin of 17,146 votes.
"Our state president has sent his resignation letter to party president Sonia Gandhi taking the moral responsibility of the defeat," state Congress spokesperson Manish Doshi said.
According to Doshi, Modhwadia congratulated Narendra Modi for the popular mandate which went in favour of the BJP.
Modhwadia spearheaded a sustained campaign against the Modi government in the run-up to the assembly elections.
