The 42-year-old Italian signed a one-season deal with Yamaha-SRT for this campaign and it had been mooted he might ride for his own team next term.
However, he told a press conference ahead of last weekend’s Styrian Grand Prix that he will call it a day, 12 years on from his last MotoGP title.
“I have decided to stop at the end of the season. Unfortunately, this will be my last half season as a MotoGP rider,” said Rossi.
“It is difficult, it’s a very sad moment. It has been a long, long journey.
“For one year, more risk than reward maybe,” he added on the idea of prolonging the adventure against his better judgment.
“It’s a very sad moment because it’s difficult to say and know that next year I will not race with a motorcycle, I’ve done that for I think more or less 30 years.”
“It’s the right moment” to stop, insisted Rossi, who will finish his career with seven premier class world titles - just one behind the all-time record of eight held by compatriot Giacomo Agostini.
He has competed in 423 grands prix races - 363 in the top class.
Recent years have seen the man nicknamed “The Doctor” combine competing with ownership of his own VR46 team, helping to bring on young riders in Moto2 and Moto3 and next season he will be free to concentrate on that mentor role.
Rossi has test driven Formula One cars from Ferrari and Mercedes in the past and said four wheels remain on his mind.
“I am a rider, a driver for life, I think,” he explained.
“I am just going to switch from motos to cars - certainly not at the same level but I think I shall continue to race,” Rossi said as reporters at his conference gave him a warm round of applause.
Warm praise for his stellar career came from rivals, including French star Fabio Quartararo, his successor at the Yamaha factory team who leads this year’s title race.
“I have no words... Big congratulations for your amazing career! I’ll remember all my life the first race I ever watch you in Jerez 2005 and you motivated me to be where I am today,” tweeted Quartararo.
Spanish rider Joan Mir meanwhile compared Rossi with basketball icon Michael Jordan for his giant impact on lifting the profile of the sport.
Rossi won top category world crowns in 2001, 2002, 2003, 2004, 2005, 2008 and 2009, having started off with a 125cc crown in 1997 before adding a 250cc title two years later.
In all Rossi made 235 podiums, 199 of them in the premier category and scored 115 victories - 89 in MotoGP/500 cc, 14 in 250 cc and a further 12 in the 125 cc category, while he piled up 65 pole positions.
After his first 125 cc race at Malaysia in 1996 he lost little time in scoring a first win that same year in the Czech Republic before advancing to the premier category in 2000, landing his first success at that level at the British Grand Prix that same season.
His last triumph came in the Netherlands in 2017 - a record 20 years and 311 days after his maiden 125 win.
But this season has seen him slide down the pecking order with Yamaha-SRT, as he currently lies 19th in the ranking with just 17 points, leading him to call it a day at year-end having only managed a sole podium last season.
“Results have not been what I was expecting so I started asking questions of myself,” Rossi admitted.
Yet his legacy to the sport is assured for good after his three top class titles with Honda and then four with Yamaha.
“Valentino is a living legend whose successes and personal flair contributed to Yamaha’s legacy and heritage in abundance,” said Yamaha managing director Lin Jarvis.
“Also, during more difficult periods, his positive mindset would be a boost to those around him, and he was always ready to go the extra mile for a good result.”
French rival Johann Zarco summed up the feelings of those closely involved in the sport.
“We must thank ‘Vale’ for what he brought to the table. He has changed the image of moto - everywhere you go in the world if you talk about moto with someone who doesn’t know about it they will mention Rossi’s name,” tweeted Zarco, in allusion to the seas of VR46 t-shirts and headgear regularly seen at meetings.