Zimbabwe's President Robert Mugabe says he is pulling his country out of the Commonwealth with immediate effect.
Mugabe: Some countries more equal than others
He said he did not accept the decision made at the Abuja summit, to maintain Zimbabwe's suspension indefinitely.
The issue has split Commonwealth leaders, with South Africa, Mozambique, Namibia and Zambia extremely upset at the move.
The summit will come to an end amidst acrimony and division later on Monday, say correspondents.
Commonwealth spokesman Joel Kibazo told the BBC that Mr Mugabe's decision to withdraw was "very disappointing".
The final of talks now under way will again be dominated by the issue of Zimbabwe.
"It is not a crisis for the Commonwealth, but it is a crisis for Zimbabwe," said New Zealand Prime Minister Helen Clark.
But correspondents say Mr Mugabe's move in effect removes any leverage or pressure that Commonwealth leaders and leaves the careful diplomacy of the Abuja summit in tatters.
Commonwealth officials and leaders of countries like Britain, Australia and Canada will now have to work extremely hard to restore the organisation's sense of unity.
Zimbabwe was suspended from the Commonwealth last year after an election widely seen as flawed.
Mr Mugabe had earlier threatened to leave the 54-nation group if the country was not "treated as an equal".
After the Commonwealth decision was taken, he received explanatory phone calls from Nigerian President Olusegun Obasanjo, South African President Thabo Mbeki and Jamaican Prime Minister PJ Patterson.
In response, Mr Mugabe said the decision was unacceptable as Zimbabwe would settle for nothing short of the removal of the suspension.
"Anything that you agreed to on Zimbabwe which is short of this position - no matter how sweetly worded - means Zimbabwe is still the subject of the Commonwealth," he said.
"It is unacceptable. This is it. It [Zimbabwe] quits and quits
it will be."
Mr Kibazo, however, said the Commonwealth wanted Zimbabwe to return and would work to continue trying to engage with its government.
But George Shire, a supporter of Mr Mugabe based in Britain, argued that the president had been put in an impossible position.
"Zimbabwe argues this is about challenging its legitimacy and once you put it that way, it had no choice other than to quit," said Mr Shire.
Before Zimbabwe's decision, Mr Obasanjo was given the crucial role of deciding whether Zimbabwe had progressed enough for it to return to the Commonwealth.
He said Zimbabwe could probably have returned within "months rather than ... years".
Obasanjo (right) had been charged with monitoring Zimbabwe's progress
Flying back to London from the summit, UK Prime Minister Tony Blair said the Commonwealth decision had been "the right outcome" and that it was important for the Commonwealth to send "a strong signal" to Zimbabwe.
Mr Mugabe had already indicated his response would be to pull out if the Commonwealth decided to maintain his country's suspension.
In a speech at the end of his Zanu-PF party's conference in Masvingo on Saturday, Mr Mugabe had harsh words for the grouping.
Commenting on Zimbabwe's suspension, and his lack of an invitation to the summit in Nigeria, he likened the Commonwealth to characters in George Orwell's novel, Animal Farm, where some members are more equal than others.