The 33-year-old has spent seven seasons with the Italian outfit but will be replaced by Michael Ruben Rinaldi in 2021.
Davies’ last race for the team will be this weekend’s season finale at Estoril in Portugal where he is set to seal third place in the standings.
The Knighton-born rider’s hopes of remaining in Superbikes next season on a factory bike are limited with most teams having confirmed their line-ups.
There are question marks at Honda and whether fellow Brit Leon Haslam will be retained alongside Alvaro Bautista.
Davies has insisted in recent months while talks have been ongoing with Ducati that he would prefer a factory ride over a satellite option, though there will be a spare seat now at Italian Rinaldi’s Go Eleven outfit.
Former World Supersport Champ Davies finished runner-up in World Superbikes three times to Jonathan Rea who is set for a sixth successive title this weekend.
Stefano Cecconi, Team Principal of Aruba.it Racin-Ducati, said: “A big thank to Chaz Davies for all the years we have spent together since we decided to embark on this fascinating adventure and during which a bond of deep respect and trust was created.
“The affection for the man and the rider will always remain intact, and for this reason, we want to wish Chaz the best for the future, both inside and outside the track”.
Luigi Dall’ Igna, General Manager of Ducati Corse, said: “I want to thank Chaz, who has been an excellent ambassador for our brand over the past seven years and has achieved some very important results with us: 27 victories plus another 59 podiums finish and three consecutive second places in the world championships.
“We will try to close in the best way our adventure together in the next race weekend in Estoril”.