The nine-time MotoGP world champion confirmed this campaign would be his last at the Styrian Grand Prix in Austria – where the Italian claimed his first Grand Prix podium in 1996 – on Thursday.
After falling down the pecking order at Yahama this season, Rossi, who has achieved 115 Grand Prix victories and 235 podiums in 414 starts, decided to continue his career with Petronas, though only managed to collect 17 points from the first nine races in the 2021 campaign.
Ahead of the summer break, the Italian was expected to announce his future plans and he did so during Thursday's exceptional news conference.
"It's a very sad moment," Rossi said to the media. "It's difficult to know that next year I will not race with a motorcycle.
"It was a long journey that I enjoyed very much. Next year, my life will change.
"It's a difficult decision but in the end in all sports it's results that make the difference, so I think it's the right decision. I can't complain about my career."
Rossi had been winless in MotoGP since the 2017 Dutch TT, though his legacy will not shrink away from the sport to which he has contributed so much.
Having set up the VR46 Riders Academy to help young Italian talent, Rossi's own VR46 team will make its debut in 2022.
While Rossi's next move remains unclear, there is speculation around him competing in the 24 Hours of Le Mans, given he has previously expressed a desire to compete with GT3 machinery.