The Foreign Ministry said Tuesday that Falconi was stepping down, but gave no reason for his decision.
News reports, however, point to President Rafael Correa's criticism of the way Falconi was handling an Amazon rain forest protection project involving the Yasuní National Park in eastern Ecuador.
Under the government's Yasuní initiative, Ecuador would leave untapped about 850 million barrels of oil in the region. In return for not exploiting the oil, the OPEC member nation would look to other countries for compensation.
President Correa had said the negotiations between Ecuador and potential donor nations were being handled "shamefully."
The United Nations Educational, Scientific and Cultural Organization (UNESCO) named Yasuní National Park a biosphere reserve in 1989, and scientists have called it one of the most biologically diverse areas in the world.