 Subaru last won the WRC in 2003 and has been third four times since
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Subaru have become the latest team to withdraw from next year's World Rally Championship as the economic downturn continues to hit motorsport hard.
It comes a day after Suzuki also quit the WRC and less than a fortnight after Honda withdrew from Formula One.
Colin McRae, Richard Burns and Petter Solberg all won titles with the Japanese team in its 20-year history.
"This sudden decision is a response to the widespread downturn affecting the industry," Subaru said in a statement.
The team was established in 1989, when the manufacturer teamed up with Prodrive, a motorsport and automotive engineering group with dealings in the UK, Thailand and Australia.
"Subaru's departure from the World Rally Championship is a great loss as it is one of the sport's icons," added Prodrive chairman David Richards.
"Although this decision closes a significant chapter in Prodrive's history, our focus now turns to the future."
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The team statement confirmed that Prodrive remains in a strong position despite the gloomy economic outlook, and hopes to return to the WRC with a new team in 2010, when new technical regulations will be implemented.
Subaru won six world titles in all, with the last coming with Solberg's victory in 2003.
But recent years have been harder going for Subaru, with their last rally win coming in Mexico back in 2005.
Subaru's exit leaves just two manufacturers in next year's championship in the shape of Citroen and Ford.
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