Nick Heidfeld has left Renault by mutual consent with immediate effect.
He has been replaced by Brazilian driver Bruno Senna, who will race alongside team-mate Vitaly Petrov for the rest of the 2011 season.
Heidfeld said: "Obviously I'm disappointed to be leaving in the middle of the season."
Renault team principal Eric Boullier said: "He is a very strong and determined racer and we wish him every success in the future."
Heidfeld was replaced by Senna for the Belgian and Italian Grands Prix after a High Court hearing said Renault were within their rights to sever contractual ties with the German.
That was only an interim decision pending a further case due to be heard on 19 September.
Heidfeld, 34, who replaced Robert Kubica following the Pole's rally accident, believed he was contractually obliged to complete the season.
But that is not now required as Renault and Heidfeld have reached a settlement and parted company with immediate effect.
Boullier said: "Our disagreement with Nick has been the subject of much media coverage lately, and we are pleased to have reached a swift and reasonable solution.
"Our separation process was already a painful one, and neither of us wanted to go through another legal hearing.
"We're very grateful to Nick for the highly valuable contribution he made to the team.
"We certainly had good times together, in particular remembering our podium finish in Malaysia."
Heidfeld, a veteran of 183 Grands Prix, is in no doubt that he will return to Formula 1 at some stage.
"I thought I could still make a big contribution to the team, but I have to see things as they are, and I want to turn my attention to the future," he said.
"We have taken the right decision by choosing to end our collaboration. One thing is for sure, I'll be back racing at the highest level soon."
Senna, the 27-year-old nephew of the late Brazilian legend Ayrton Senna, will contest the remaining seven races, with Romain Grosjean as reserve.
Renault are hopeful that Kubica will be fit enough to return next season.