Updated: July 4, 2:17 a.m.

Alaska’s GOP Gov. Sarah Palin left Republicans and Democrats alike scratching their heads on Friday after the former vice presidential nominee announced she would resign with two years left in her term.

Lt. Gov. Sean Parnell will take the reins of state government on July 26.

“I’m as surprised as all Alaskans by Governor Palin’s decision to step down with nearly two years left in her term. There was speculation she would not seek re-election, but she gave no indication of a resignation when I met with her for 45 minutes in her Anchorage office two days ago,— Sen. Mark Begich (D-Alaska) said Friday.

Sen. Lisa Murkowski (R-Alaska) seemed equally shocked by Palin’s decision, and she released a curt one-sentence statement on the matter. Palin defeated Murkowski’s father, then-Gov. Frank Murkowski (R), in a 2006 primary.

“I am deeply disappointed that the Governor has decided to abandon the State and her constituents before her term has concluded,— Murkowski said. The statement also said that Murkowski is in interior Alaska and only able to communicate via satellite phone therefore she is unavailable for follow up questions until Monday.

Speculation among Republican operatives covered the gamut: Palin is setting up a presidential run in 2012 — or perhaps she is getting out of electoral politics altogether.

Former Massachusetts Gov. Mitt Romney, who may still face Palin in a GOP presidential primary, offered a short, best-of-luck statement: “I wish Sarah Palin and her family well, and I know that she will continue to be a strong voice in the Republican Party.—

While Palin is immensely popular with GOP conservatives, she has been a polarizing figure for most Democrats and many independents since Sen. John McCain (R-Ariz.) tapped her to be his running mate last year.

A series of controversies involving Palin, her husband, Todd, various in-laws and her children — as well as a less-than-stellar relationship with Republican leaders in Washington, D.C. — wore on the nerves of many mainstream Republicans.

“Governor Palin can now run for president without playing the balancing act of keeping Alaskan voters happy,— said Ron Bonjean, a GOP consultant who served as a leadership aide in both the House and Senate. “While she has a core following, many Republicans are getting tired of the constant drama that surrounds her family. To win over mainstream Republicans and independents, Palin will need to start talking about important ideas and solutions instead of creating or reacting to tabloid issues.—

But Republican National Committee Chairman Michael Steele said he sees a major role for Palin in upcoming off-year elections.

“I plan on talking to Governor Palin very soon,— Steele said in a statement. “She is an important and galvanizing voice in the Republican Party. I believe she will be very helpful to the Party this year as we wage critical campaigns in Virginia and New Jersey. I am certain this has been a difficult decision for her to step down as Alaska’s governor. She has been a good governor for her state and I wish her and the Palin family the best during this transition.—

Democrat Ethan Berkowitz is considered by some veterans of Alaska Democratic politics to be a leading candidate for the party in the 2010 gubernatorial race. Berkowitz lost to Rep. Don Young (R-Alaska) last year and has already ruled out a second House run. Democrats have yet to come up with a credible challenger to Young despite ethics issues that continue to dog the incumbent.