Sebastian Vettel is to leave Ferrari at the end of the year after contract talks between the two broke down with no agreement.
Ferrari team principal Mattia Binotto said the decision was mutual and was "not easy to reach, given Sebastian's worth as a driver and as a person".
He added: "The time had come to go our separate ways in order to reach our respective objectives."
Vettel said there was "no longer a common desire" to work together.
The German four-time world champion added: "In order to get the best possible results in this sport, it's vital for all parties to work in perfect harmony.
"Financial matters have played no part in this joint decision. That's not the way I think when it comes to making certain choices and it never will be.
"What's been happening in these past few months has led many of us to reflect on what are our real priorities in life. One needs to use one's imagination and to adopt a new approach to a situation that has changed. I myself will take the time I need to reflect on what really matters when it comes to my future."
Vettel's team-mate Charles Leclerc, whose starring performances in 2019 effectively forced Ferrari and the 32-year-old into this position, said: "It's been a huge honour for me to be your team mate. We've had some tense moments on tracks.
"Some very good ones and some others that didn't end as we both wanted, but there was always respect, even though it wasn't perceived this way from the outside.
"I've never learnt so much as I did with you as my team-mate. Thank you for everything Seb."
Who could replace Vettel?
Spaniard Carlos Sainz, currently a McLaren driver, is among those who have been linked to Vettel's seat.
If Sainz leaves McLaren, one option for the team is Renault's Daniel Ricciardo.
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The Australian had serious talks with McLaren in 2018 when he was weighing up whether to leave Red Bull, before finally deciding to move to Renault.
Ricciardo is known to be unsettled at the French team and has talked about moving on.
Vettel could also be an option for McLaren, if he felt he was prepared to move to a team that was going through a restructuring process.
If not, the options for him to continue in F1 are bleak.
The factory Renault outfit might be an option, but they - like McLaren - are in a rebuilding process and may not be attractive to such an illustrious name.
Lewis Hamilton, who is also out of contract at the end of the season, has repeatedly signalled his intention to stay at Mercedes, who are not believed to be considering a move for Vettel.
And Red Bull, where Vettel won his four world titles, have said that they would not partner their star driver Max Verstappen with another top-line driver - nor is Vettel likely to be interested in partnering the Dutchman.
Ferrari's other options are Ricciardo or Italian Antonio Giovinazzi, who races for the affiliated Alfa Romeo team.
Hamilton is not considered to be a serious possibility.
A remarkable fall from grace
Vettel's departure from Ferrari signals an ignominious end to his career at the Italian team, who he joined in 2015 with the aim of following in the footsteps of his childhood hero Michael Schumacher by winning the title with them.
Vettel said as recently as last month that his intention was to stay with Ferrari beyond the end of his contract this season.
But talks have broken down after Vettel felt unable to accept the offer Ferrari made to him to stay alongside Leclerc, who last winter signed until the end of 2024.
The exact nature of the disagreement that led to the failure of the talks is not clear, but Ferrari are reported to have offered Vettel a vastly reduced salary and a shorter contract than he desired.
Vettel had been Ferrari's number one driver since 2015, when he replaced Fernando Alonso after the Spaniard negotiated an exit from the team at the end of 2014 having lost faith they could ever provide the circumstances in which he would win the world title.
Vettel came closest to winning the championship with the team in 2017 and 2018, when Ferrari had a faster car than Mercedes for much of both seasons but their challenge faltered after a series of mistakes from driver and team.
That led to the beginning of a loss of faith between the two parties and he lost his position in the team for good with the arrival of Leclerc last season.
The Monegasque was immediately a threat to Vettel, who started 2019 as the designated number one, and Leclerc ended the season having out-scored his senior team-mate on every metric - wins, poles, points and average qualifying pace.
The tension between the two also led to a series of flashpoints culminating in a crash at the penultimate race of the season in Brazil.
Vettel now heads into his final season with the team - assuming the 2020 championship is able to start amid the coronavirus pandemic - knowing he has lost his status and facing an uncomfortable season in a team whose focus will inevitably be on their rising young star.