Nicholas Latifi will lose his seat at Williams at the end of the year.
The 27-year-old Canadian has raced with the team since the start of 2020, and struggled to compete with team-mates George Russell and Alex Albon.
Latifi said: “Although we have not achieved the results we hoped we would, it’s still been a fantastic journey.”
Williams, who announced last month that Albon will stay with the team for 2023, said they would name the British-born Thai’s 2023 team-mate “in due course”.
Williams chief executive officer and team principal Jost Capito said: “He is a great team player who has a great attitude towards his colleagues and work and is well liked and respected throughout the business.”
Latifi came to Williams with substantial financial backing thanks to his father, the Canadian supermarket magnate Michael Latifi.
The high point of his Williams’ career was at the 2021 Hungarian Grand Prix, when he ended a two-year points drought for the team when he finished seventh in the Hungarian Grand Prix.
It was a race marked by a first-corner crash and the bizarre sight of only one driver on the grid for the start, leading to a shuffling of the order that vaulted Latifi to run second in the early laps, and he held on for his breakthrough moment.
Ironically, he finished one place ahead of Russell, who out-qualified him 20 times in 22 races during the season.
“Getting those first points in Hungary last year was a moment I’ll never forget,” reflected Latifi.
“I will move onto the next chapter of my career with special memories of my time with this dedicated team.”
Russell’s move to Mercedes at the end of 2021 failed to improve Latifi’s position – Albon has out-performed him just as comprehensively as the Briton did.
Who might replace Latifi?
Williams had hoped to replace Latifi with Australian Oscar Piastri.
Piastri, the reigning Formula 2 champion, is Alpine’s reserve driver this year, but he objected to the team’s attempts to place him at Williams and will instead make his F1 debut for McLaren in 2023 alongside Lando Norris.
Another option for Williams is Dutchman Nick De Vries, who finished ninth at the Italian Grand Prix two weeks ago when he was drafted in at the last minute after Albon was hospitalised for appendicitis.
But De Vries – a Mercedes reserve driver and former champion of both Formula 2 and the all-electric Formula E series – is also in the frame for a move to Red Bull’s second team, Alpha Tauri.
Both Pierre Gasly and Japanese Yuki Tsunoda are under contract at Alpha Tauri for next season, but the Frenchman is of interest to Alpine, who are without a team-mate for Esteban Ocon after losing Fernando Alonso to Aston Martin and Piastri to McLaren.
Red Bull motorsport adviser Helmut Marko, who makes the company’s driver decisions, is prepared to let Gasly go to Alpine if there is a suitable replacement.
Marko had wanted IndyCar race-winner Colton Herta, but he is not eligible for an F1 ‘super-licence’, and De Vries has emerged as the leading candidate.
Other experienced drivers on the market for next season include Mick Schumacher, who is expected to lose his seat at Haas, and Alfa Romeo and Ferrari reserve Antonio Giovinazzi.
Williams also have the option of promoting American Logan Sargeant, a member of their driver academy, who is lying third in the F2 championship this season.