Amid speculation of a move to One Nation, the former leader of the Nationals said it had become untenable for him to remain in the party room and that relationships with leaders had deteriorated beyond repair.
"My relationship with the leadership of the Nationals in Canberra has unfortunately, like a sadness in some marriages, irreparably broken down," the former deputy prime minister wrote in a letter to branch members.
Mr Joyce was relegated from the party's frontbench by current leader David Littleproud earlier this year.
The statement confirmed the veteran MP will see out the rest of the parliamentary term but not stand for his New England seat at the 2028 election.
Reports the firebrand MP plans to run for a Senate spot for conservative minor party One Nation, led by Pauline Hanson, were not confirmed, but his options have been kept open.
"I am free to now consider all options as to what I do next," he said in the statement.
The move is the latest display of internal discontent within the federal coalition's ranks after its worst election result in its 81-year history.
Conservative NT senator Jacinta Nampijinpa Price has been sacked from the front bench and MP Andrew Hastie has resigned from the shadow ministry over policy differences, including climate policy.
A vocal critic of the emissions-reduction goals and the associated rollout of renewable energy to meet them, Mr Joyce has declared it a sore spot in his relationship with the Nationals.
"Our position in continuing to support net zero with the massive schism and hurt to my electorate, to small businesses, to the environment, to the poor, to the defence of Australia and creating hate between lifelong friends in my community makes continuing in the Nationals' party room in Canberra under this policy untenable," the statement read
Both the Liberals and the Nationals have announced reviews of their net-zero policies, which are still ongoing.
The move by Nationals leadership to instruct Mr Joyce not to campaign outside his electorate during the last federal election was also criticised by the veteran MP, as was his demotion to the back bench.
Treasurer Jim Chalmers said the coalition was "more divisive and more divided than ever".
"You know the coalition is bad if not even Barnaby Joyce wants to be part of it," he said.
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