In statement issued by the German car maker, de Silva will retire at the end of the month, although he will continue working for the company as an advisor.
De Silva joined the Volkswagen Group in 1998 when he became the head of design at Seat. By 2002, da Silva was in charge of the "Audi group" within Volkswagen, which encompasses Audi, Seat and Lamborghini.
He is widely credited with ushering Audi's single frame grille through from concept cars into production, and in the process give the upstart luxury brand a clear visual identity to rival that of BMW's kidney grille and the three-pointed star from Mercedes-Benz.
De Silva was promoted to oversee design at the entire Volkswagen Group in 2007.
Volkswagen credits da Silva with playing a key role in the Volkswagen Up, the Mark VI and Mark VII Golf, and Audi R8, as well as the original Audi A5, a car he described at the time as "the most beautiful car" he had ever designed.
Walter de Silva began his career in 1972 at Fiat's Turin design centre. He left three years later to work for a series of design studios. He rejoined the company in 1986 to become head designer at Alfa Romeo, where his credits include the 156 and 147.
His retirement from the German automaker may have been influenced by the company's recent troubles caused by a recently revealed emissions testing cheat code that was installed in up to 11 million cars with the EA189 diesel engine.
Dubbed "dieselgate", the affair has caused the company much grief, slashed its share price, and looks set to cost the company billions of euros in rectification work, law suits, government scrutiny and bad press.
The company has already budgeted 6.5 billion euros ($9.9 billion) to deal with the problem, but this number could well blow out, especially if claims by the United States' EPA that 3.0-litre V6 turbo-diesel cars also feature a defeat device are proven to be true.
Volkswagen has already began a series of internal investigations, and is currently reorganising itself to give more independence to regions and brands.
As part of the changes, the company has halted work on non-essential projects. According to Handelsblatt, a German business newspaper, Volkswagen is seeking to trim the design department's 100 million euro ($152 million) annual budget.