Elliott, who originally joined the squad in 2012 as head of aerodynamics after spells with McLaren and Renault/Lotus, has played an instrumental part in the success that Mercedes has enjoyed in F1 during the turbo hybrid era.
But with his current contract coming to an end later this year, and him having stepped away from the technical director role earlier this year in a job swap with James Allison, he has decided that now is a good time to move on.
Elliott made the announcement to factory staff on Monday evening and is now expected to serve a period of gardening leave before he decides what is next for his career.
Speaking about his decision, Elliott said he wanted to take some time away from the intensity of F1, after 23 years of working flat out.
"It has been one of the great privileges of my career to be part of this Mercedes team," he explained.
"During my time, I have seen it grow from a group of people pulling together to win races, then a first championship, to winning a record eight consecutive Constructors Championships. – and I am proud to have made my contribution to that journey.
"Although the last two seasons have not seen us winning races in the manner we aspire to, they have tested us in many other ways – and forced us to question our fundamental assumptions about how we deliver performance.
"During the past six months, I have enjoyed developing the technical strategy that we hope can provide the foundations of the team's next cycle of success.
"I have decided that now is the right time to make my next step beyond Mercedes – first to pause and take stock, after 23 years of working flat-out in this sport, and then to find my next challenge. I would like to thank my team-mates for a fantastic 12 seasons together and wish them every success for the years to come."
Mercedes boss Toto Wolff was one of the first to praise Elliott's contribution to the team.
"Mike has been one of the pillars of the team's achievements over the past decade, and it's with truly mixed feelings that we say goodbye to him today," explained Wolff.
"Mike is a fiercely intelligent technical brain and a great team-player; he has made a strong contribution not just to winning racing cars but also to building the culture of our team.
"But on the other side, it's clear that he's ready for new adventures beyond Mercedes – so I know this is the right step for him to take, too.
"He leaves the team today with our thanks for the effort, commitment, and expertise he has brought to the team over the past 11 years – and our very best wishes for the future."
