Bhandari, who was appointed chair in 2019, will step down after more than seven years in the role.
During his tenure, he has overseen a transformation of the organisation, including improved financial independence and governance, the appointment of an entirely new board and leadership team, and a new team structure.
Kick It Out launched its new five-year strategy, Football United, last year, while Samuel Okafor was appointed chief executive in 2024.
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Bhandari said: "It has been a tremendous honour to chair Kick It Out.
"Our 'Football United' strategy is deliberately built on a vision of bringing together governing bodies, clubs, players, supporters, communities and partners to create lasting change.
"In a world that often feels increasingly negative and divided, we are consciously seeking to strike a different tone.
"The new chair will play a pivotal role in helping Kick It Out deliver that vision, by leading an experienced and committed Board, and working closely with our chief executive to represent an organisation that has become one of the most respected voices for equality and inclusion in sport.
"This is a unique opportunity for someone who believes in the power of football to bring people together and who wants to help shape the future of the nation's game."
Bhandari was awarded an MBE in 2024 for his services to football during his time with the charity, which was established in 1993.
Kick It Out will now begin a formal recruitment process to identify a preferred candidate by the end of December 2026.
The new chair is expected to work alongside Bhandari during the remainder of the 2026/27 season as part of an orderly transition before formally taking up the position on July 1, 2027.
The successful candidate will inherit a role at a time when significant challenges remain around making football more inclusive and representative, both on and off the pitch, while tackling discrimination.
Kick It Out has established itself as a leading voice in campaigning for policy change, working with the Government, regulators and football's governing bodies, including the Premier League, EFL, FA and PFA.
The charity also delivers education programmes with supporters, club academies and online, while its Raise Your Game programme provides development opportunities.
Kick It Out's discrimination reporting service remains a key part of its work, with reports of abuse continuing to rise.
The organisation has also expanded its reach through a partnership with Guinness 0.0, which has seen 4,000 staff trained to identify and tackle discrimination across 900 Greene King sports bars in England, Scotland and Wales.
Working with partners including Sky, McDonald's Fun Football, Visit Tampa Bay and Morrisons Foundation, Kick It Out is targeting further growth in its education and inclusion programmes as part of its strategy through to 2030.
