"It is very sad and I would have liked to continue for a few more years but I realise it is not possible to race in the WRC (World Rally Championship) next year," said the 38-year-old, who has won 13 rallies in 188 starts.
"I said that I was ready to race for nothing but I am not willing to pay to race.
"It does not mean that you will never see me again in WRC but for the moment I think it is the best decision."
Solberg's star has been eclipsed by French legend Sebastian Loeb, who has been crowned world champion nine times and won 76 rallies which played a big part in the 15 second place finishes accumulated by the Norwegian.
Solberg – a former acrobatic dance star – finished fifth overall this year.