Final answer:
Mussolini resigned as leader after the pact due to casualties, Allied victories, and a coalition against him. Hence, the decision was taken due to the fall of the Fascist regime and Italy's military defeats after the signing of the Pact of Steel.
Step-by-step explanation:
Mussolini resigned as leader after the pact due to several factors. Firstly, the invasion of the Soviet Union resulted in heavy casualties for Italy, which led to humiliation. Additionally, Allied victories in North Africa and Sicily further weakened Mussolini's position.
Lastly, a coalition of former fascist supporters, military officers, politicians, and the king concluded that Mussolini had to go, leading to his removal from power and arrest. Italy then signed an armistice with the Allies. Mussolini's resignation marked a critical moment in Italian history, leading to the end of Fascist rule and Italy's subsequent shift in alliance during the war.