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.
Source: Autosport