"I have decided to give up my membership of the AAP and resign from all positions within the party," Ilmi said at a press conference in Delhi.
"This is a difficult decision for me but it is triggered by the lack of inner-party democracy, specially from a party that constantly talks of Swaraj," she added.
Bangalore-based Gopinath, founder of Air Deccan, attacked Kejriwal and questioned his decision to go to jail and not pay the bail amount in a defamation case.
He said the head of a party cannot indulge in "shoot and scoot politics".
"I would like to resign from the membership of the Aam Admi Party with immediate effect because of increasing differences with the party leadership and its ways," said Gopinath, who joined the party in January.
Ilmi said the party needed to reinvent itself and go beyond agitation.
"Instead of wasting our collective energy in this jail-bail imbroglio, Arvind should actually be spending time with cadres, candidates, volunteers, critics etc.," she said.
"I am not for jail bharo politics. There is a need to reinvent the AAP, go beyond agitations. Sensationalism may have helped us make our point initially, but to continue to use it as a norm defeats the exercise of trust reposed in us by public," she added.
Ilmi said the AAP was being run by a "crony clique" who took "impulsive decisions".
"We fight against cronyism but we have a crony clique who run the party and take impulsive decisions which we learn about later. We cannot follow the principles of Swaraj within our own party," she said.
She further said Kejriwal failed to follow the concept of Swaraj personally and accused him of shooting the messenger.
"Arvind has shot the messenger. For the last four years, I fought like an obedient soldier. However, now I have been systematically marginalised because I offered a voice of dissent and constructive criticism," she said.
She, however, quickly added that she had the "greatest respect" for Kejriwal and the selfless volunteers who were the "backbone of the party".
Ilmi also clarified that her resignation from the party was not due to the fact that she was asked to contest the Lok Sabha election from Ghaziabad, from where she lost.
"I deny whisper campaigns that my resignation has to do with being fielded from Ghaziabad," Ilmi said.
AAP leader Yogendra Yadav said the party was saddened by the news and the fact that they could not convince Ilmi to change her mind.
"From the time I came to know she wanted to organise a press conference, I spoke to her and asked her to think over the decision. We also told her that Arvind is in jail and not to take such a decision. We are sad we could not convince her," he said.
"We will surely introspect as we also feel the party has made certain mistakes. It is time for the AAP to learn from its mistakes," he added.
Another AAP leader, who is a member of the political affairs committee of the party, said "these are testing times" for the party.
"There are people who come to contribute to the party and when they feel they have done their job they leave. These are testing times for the party but we will tide over," the leader told IANS requesting anonymity.
The Bharatiya Janata Party (BJP) and the Congress held Kejriwal and his close associates responsible for the crisis.
"This had to happen. This party is being run by three-four people who are arrogant just like their leader (Kejriwal). I agree with Ilmi-ji that there is no democracy in the party," Delhi BJP leader Jagdish Mukhi told IANS.
"This is the beginning of the breaking up of the party," he added.
The Congress also took a pot shot at Kejriwal and called the AAP a "private limited firm" of the leader.
"The allegation levelled by Shazia Ilmi adds credence to the allegation of the Congress against the party. The allegation has come true now," Delhi Congress spokesperson Mukesh Sharma told IANS.