Ulster failed to convince the IRFU to sanction a new deal Ruan Pienaar, meaning the South Africa scrum-half will depart the club.
Ruan Pienaar is to leave Ulster at the end of the 2016-17 season after the Irish Rugby Football Union (IRFU) refused to sanction a contract extension.
South Africa scrum-half Pienaar has been a mainstay of Ulster's XV since joining in 2010 and played a key role in helping the Irish side's run to the 2012 Heineken Cup final.
Pienaar, who has contributed 777 points in 118 competitive matches for Ulster, signed a new contract in 2013 despite heavy interest from Top 14 giants Toulon.
Ulster and Pienaar expressed in a club statement that both parties were keen for him to extend his stay, but the IRFU intervened.
"I am not moving on for a new adventure or for financial reasons - I wanted to stay and I know that Ulster Rugby did everything it could to keep me in Belfast," Pienaar said.
"Ulster is special to me and my family now, and I would like to thank my wife, Monique, for coming here to support me and for helping to make it home for us."
The IRFU released a statement explaining that Pienaar, who has 88 caps for the Springboks, would not have his deal renewed as it may hinder the development of home-grown talent.
"The IRFU recognises the contribution that Ruan Pienaar has made to Ulster Rugby over the seven-year period he will have been with the province, however the IRFU informed Ulster Rugby during the 2015-16 season that it would not sanction a further extension of his contract," IRFU performance director David Nucifora said.
"It is vital for both Ulster and Irish rugby that the province develop indigenous talent in this position and an extension of Ruan's contract would further prevent Irish qualified Ulster players from maximising their developmental potential and becoming stars for both Ulster and Ireland."