Antonio Ortiz Mena, president of the Inter-American Development Bank for 17 years, announced yesterday he will resign on Feb. 29.

Ortiz Mena, 75, who was caught up in a long-running dispute between the United States and Latin American countries over control of the bank, cited a desire to return to his native Mexico. His successor will be picked by the bank's executive board.

Separately, Reagan administration sources said the United States is advancing as its candidate for the post of IDB executive vice president a Treasury official who has been the point man in the department's efforts to rein in the IDB. The Treasury official is James W. Conrow, currently deputy assistant secretary for developing nations.

The United States traditionally chooses the executive vice president, although the bank's executive board would have to approve Conrow's nomination.

The current executive vice president, Michael Curtin, is understood to be leaving the bank, although it hasn't been announced, the sources said.

Ortiz Mena said in a letter of resignation released by the IDB that he feels "the moment has arrived for me to return to Mexico, particularly at this time" when his nation is having economic difficulties. During his tenure, the bank expanded its activities significantly, with development loans to Latin countries reaching over $3 billion annually.

Ortiz Mena's letter didn't mention the disputes between Latin countries and the U.S. government, and a bank source said that Ortiz Mena didn't cite the disputes when he told the IDB board yesterday afternoon of his decision to leave.

But in the past year, Treasury Secretary James A. Baker III has sought to increase control over the IDB, provoking a bitter reaction from Latin American governments and Latin officials at the bank.

The 44-nation IDB is different from other multilateral lending institutions such as the World Bank because voting power is concentrated with the recipients rather than providers of loans.

Baker tried to change the voting arrangement so that the United States and Canada, voting together, would gain near-veto power over IDB loans. When the U.S. proposal was turned down, Baker ordered a reduction in planned U.S. contributions to the bank.

U.S. officials complain that the IDB exerts too little "conditionality" on the uses of loan proceeds and allows some of the money to go for projects that benefit politically powerful individuals in Latin countries. Some Latin critics of the U.S. position have voiced fears that the United States would use greater voting power to block loans for Nicaragua and other adversaries.

Ortiz Mena was named IDB president on Nov. 27, 1970, and the board subsequently reelected him three times to five-year terms.