Nico Rosberg made the shock announcement in a statement posted via his Facebook and Twitter accounts on Friday, just five days after he had won the drivers' title for the first time.
"From the moment when the destiny of the title was in my own hands, the big pressure started and I began to think about ending my racing career if I became world champion," the Wiesbaden native said.
"On Sunday morning in Abu Dhabi, I knew that it could be my last race and that feeling cleared my head before the start. I wanted to enjoy every part of the experience, knowing it might be the last time," Rosberg, who is still just 31, added.
"Now I've achieved that, I've put everything into it for 25 years of racing and with the help of everybody around me, with the help of fans and the help of my team and my family and friends I have managed to achieve that this year," the statement said. "So it has been an incredible experience for me that I will remember forever.
A day of reflection
"I took my decision on Monday evening. After reflecting for a day," he said, before noting that he wanted to spend more time with his family. Rosberg is married and has a one-year-old daughter.
"The only thing that makes this decision in any way difficult for me is because I am putting my racing family into a tough situation."
In his father's footsteps
Rosberg secured his first drivers' title by finishing second to his Mercedes teammate and rival Lewis Hamilton at Sunday's Abu Dhabi Grand Prix. He thus followed in the footsteps of his Finnish father, Keke, who won the 1982 drivers' championship. This made them only the second father-son duo to have both won the title, after Graham and Damon Hill.