The 62-year-old said he had stepped down as director to allow him more time to focus on his legal difficulties.
The controversial businessman, who is fighting an extradition request from the Indian government, is to remain as team principal of the Formula 1 outfit.
He is accused of defrauding Indian banks and has had his passport revoked while the government seeks to force him to return from exile in the UK.
“There was no compulsion anywhere to resign. It’s just that I decided my son should replace me,” he said.
“I have my own legal issues to take care of, so it’s better that the company remains unaffected.”
Mallya co-owns Force India with another controversial Indian businessman, Subrata Roy, who has served a jail sentence for financial irregularities. Each owns 42.5%, and Dutch businessman Michiel Mol 15%.