The 35-year-old driver said the decision to retire had been difficult but that he had spent a long time thinking about it.
The German said that he will be shifting his focus to spending more time with his family. He is leaving the sport as one of the most successful drivers in the history of the sport.
In his statement, he said, “Today is not about saying goodbye. Rather, it is about saying thank you - to everyone - not least to the fans, without whose passionate support F1 could not exist.”
From 2010-2013 when he was still driving for Red Bull, he won four consecutive drivers titles. However, he did confirm that he enjoyed his time with Aston Martin.
“Although our results have not been as good as we had hoped, it is very clear to me that everything is being put together that a team needs to race at the very highest level for years to come.
“I hope that the work I did last year and am continuing to do this year will be helpful in the development of a team that will win in the future, and I will work as hard as I can between now and the end of the year with that goal in mind, giving as always my best in the last 10 races.”
Aston Martin had said that they were planning to keep Vettel on. But in a video statement, he said, “I love this sport but as much as there is life on track there is my life off track, too. Being a racing driver has never been my sole identity.
“I believe in change and progress and that every little bit makes a difference.
“Committing to my passion no longer goes side by side with my wish to be a great father and a husband.”
He added: “I feel we live in very decisive times and how we all shape these next years will determine our lives.
“My passion comes with certain aspects that I have learnt to dislike. They might be solved in the future but the will to apply that change has to become much stronger and has to lead to action today - we cannot afford to wait.
“My best race is still to come.”
Aston Martin is yet to announce if they plan to replace Vettel.
The German has had an amazing start to his career. He is fourth on the list for the most world titles and third on the list for the most race wins at 53.
In his statement, he also said, “Today is not about saying goodbye. Rather, it is about saying thank you - to everyone - not least to the fans, without whose passionate support F1 could not exist.”