Honda is pulling out of Formula One, blaming the world economic crisis for plans to sell its team.
The decision leaves Englishman Jenson Button and 2009 team-mate Rubens Barrichello without drives, with only a few mid-ranking seats still available.
Honda, which spent more than £300m a year on F1, said it would also no longer supply the sport with engines.
The team say they are optimistic they will find a buyer who will enable them to continue in the sport.
Chief executive Nick Fry said he has had three approaches already.
But a deadline of January has been set to find an investor and workers at Honda's Brackley base have been told to expect redundancy letters before Christmas.
"Honda Motor Co. has come to the conclusion that we will withdraw from all Formula One activities, making 2008 the last season for participation," said Honda president Takeo Fukui at an emotional press conference.
HONDA IN F1
Honda team created in 2006 after BAR team was taken over
Finished fourth in 2006 constructors' championship with 86 points, but struggled to eighth in 2007 (six points) and ninth in 2008 (14 points)
Team costs Honda £200m annually with more than 800 staff at Brackley
Honda ran F1 cars with minimal advertising, meaning more funding had to come from Japanese parent company
English driver Jenson Button could lose his place in the sport if the team were to fold
"This difficult decision has been made in light of the quickly deteriorating operating environment facing the global auto industry... and the sudden contraction of the world economies," he added.
"Honda must protect its core business activities and secure the long term as widespread uncertainties in the economics around the globe continue to mount."
According to the Reuters news agency, team bosses Ross Brawn and Nick Fry told a meeting of the Formula One Teams' Association they had a month to find a buyer, otherwise Honda were closing the team.
BBC sports news correspondent Adam Parsons said the team was available for a nominal fee of £1. But any new owner would need a budget of at least £40m to compete in F1 next year.
If no buyer is found, Honda's decision will leave F1 with just 18 cars on the grid next season.
Honda said next year's Japanese Grand Prix at its Suzuka circuit would go ahead as planned.
Button 'to stay positive'
Honda recently cut road vehicle production as a response to the global economic crisis - the company's sales in its key US market were down 30% last month.
F1 is a notoriously expensive sport in which to compete, and teams have spent recent months in intensive discussions over cost-cutting measures.
Max Mosley, president of world motorsport governing body the FIA, recently urged teams to find ways to reduce costs.
In an exclusive interview with the BBC, Mosley described Honda's withdrawal as a significant warning to the rest of the teams to start cutting costs dramatically.
Mosley wants to make drastic changes for the 2010 season - including making a standard engine and gearbox available to all teams at a projected cost of 5m Euro (£4.4m) per team.
Jenson Button faces an uncertain future after the announcement
The idea is opposed by the road-car constructors still in F1, who are proposing a new engine formula of their own.
Honda's decision came as a surprise within the sport as it curtails the company's involvement just when they were expecting to deliver on their investment.
Honda appointed Brawn, the man who masterminded seven world titles for Michael Schumacher at Benetton and Ferrari, as their team principal prior to the start of the 2008 season.
His arrival was seen as the signal for the start of a concerted push for success by the company after several seasons as also-rans.
The company returned to F1 as a team owner and car builder in 2005, having spent five years as an engine supplier to the British American Racing team.
But they have struggled to make an impact at the top levels of the sport.
Their sole victory of the modern era came with Button's win at the Hungarian Grand Prix in 2006.
But they have been uncompetitive in the last two seasons - and they effectively wrote off 2008 to focus on building as competitive car as possible for next year, when new rules will be introduced.
Brawn said on Friday he was confident Honda would have been at the front in 2009.
Honda's team principal on hopes the team can continue under a new owner
Considered a major player within F1, Honda bankrolled more than 700 staff at the team's Northamptonshire base and had one of the largest budgets in the sport.
In November, Honda announced it would build fewer cars in Japan, Europe and the US to reflect bleak economic prospects in the vehicle manufacturing industry.
Sales of new cars in the UK suffered their biggest monthly drop in 28 years, while car makers Ford, GM and Chrysler have asked the US Congress for multi-billion dollar loans to guarantee their survival.
The last team to leave F1 were Honda-backed minnows Super Aguri, which folded for financial reasons in April.
Honda's own F1 team endured a deeply disappointing 2008 season on the track, earning just 14 points, leaving them the lowest of the nine points-scoring teams.
Button found himself ranked 18th in the drivers' list, contributing only three points.
Only four drivers, each without a point to their name, ranked below him. Barrichello earned the remaining 11 points - more than half of them earned with a third place in the wet British Grand Prix.
Honda initially entered F1 as a constructor in the 1960s, withdrawing at the end of 1968.
The company returned to F1 in the 1980s as an engine supplier with great success with the Williams and McLaren teams and then purchased a stake in the BAR team from British American Tobacco (BAT) in 2004.
Honda bought out BAT in 2005 to form the Honda team for the 2006 season.
While the team finished fourth in the 2006 constructors' championship, they have subsequently struggled to make an impact.
The 2009 Formula One season begins on 29 March, in Australia.
This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.