Sunderland, 57, has been offered another position in the organization and has accepted.
"It's been a great four years with a great organization," Sunderland said. "This was a gut-wrenching decision for me because I still have a passion for the game."
Sunderland plans to move back west with his wife to be with their ailing mothers.
"My family's very important to me," added Sunderland. "I'll still help the organization but from a distance. This is just something I had to do, but I feel good about it because it's family-related."
The Giants were adamant about squashing rumors that Sunderland was forced out the door. "Are you kidding?" GM Ernie Accorsi asked. "We could never fire him; he's done a great job for us."
Sunderland's replacement will be Jerry Reese, who joined the Giants scouting department in 1994 and has been assistant director of pro personnel for the past three years.
"Jerry was there when I came in," Sunderland said. "He's a great scout. It will be a seamless transition for the organization."
In addition to Sunderland, the Giants are also losing their assistant general manager. Rick Donohue, who has been with the club for 19 years, will retire on May 31.
Sunderland, who was hired in May 1998, was in charge of overseeing all aspects of college scouting with his primary responsibility the organization of the Giants draft effort. He is a 25-year veteran of the NFL, having also worked in the scouting departments of the Patriots and Jets.
On April 20, the Giants got their top choice in the first round of the draft, when they moved up one slot, to No. 14, to select TE Jeremy Shockey. During Sunderland's tenure, their other first-round selections were OT Luke Petitgout, RB Ron Dayne and CB Will Allen.
Reese is viewed as a talented up-and-comer within the organization. He is a former assistant coach at the University of Tennessee at Martin, where he had a successful career as a defensive back from 1981-84.