Wallace, who was in the national spotlight in June after NASCAR said a noose was found hanging in his garage stall at Talladega Superspeedway in Alabama, will finish the final nine races of the season in the No. 43. Chevrolet.
"This was not an easy decision as I have nothing but the utmost respect for Richard Petty and his family, but I believe it's time for someone else to take over the reins of the No. 43," Wallace said in a statement on Twitter.
Wallace, who is in this third year with Richard Petty Motorsports, has a career-best five top-10 finishes this season and is 23rd in the NASCAR Cup Series Standings.
"Earlier this morning, Darrell 'Bubba' Wallace Jr., informed Richard Petty Motorsports he will not be returning for the 2021 NASCAR Cup Series season," the team said in a statement.
"We look forward to the next chapter in the making for the iconic No. 43 team. We will announce our new driver in the near future."
Wallace was thrust into the spotlight this year when his calls for NASCAR to ban the Confederate flag -- which many Americans see as a symbol of oppression -- at all events was ultimately adopted.
The driver was later thought to have been a victim of a racial attack when a noose, a symbol connected to lynching and America's slave history, was found in his garage.
The incident rocked NASCAR and took on added significance at a time of heightened tension over racism in the United States following nationwide protests over the death of African American George Floyd in police custody.
The noose, according to NASCAR, was actually a garage door pull rope fashioned like a noose.
The U.S. Justice Department said after an investigation that the noose may have been in the garage since last October and that Wallace was not the target of a hate crime. (Reporting by Frank Pingue in Toronto Editing by Toby Davis)