The producer/musician will give up his seat on the panel next week (16May13) after the latest Idol queen is crowned.
The news comes amid reports that all four judges - Jackson, Mariah Carey, Nicki Minaj and Keith Urban - are poised to depart after the current season ends, and hours after it was announced that Carey had dropped Jackson as her longtime business manager.
He tells E! News, "To put all of the speculation to rest, after 12 years of judging on American Idol I have decided it is time to leave after this season.
"I am very proud of how we forever changed television and the music industry. It's been a life-changing opportunity but I am looking forward to focusing on my company, Dream Merchant 21, and other business ventures."
Jackson is the last remaining member of the original panel, which included Simon Cowell and Paula Abdul.