Its exit was formally confirmed by Alexander Bredikhin, marketing director for Lada's parent company AvtoVAZ, on Thursday.
The two races in Qatar later this month will therefore be the manufacturer's last in the WTCC.
Lada has enjoyed its most successful season in the championship to date this year, but will now join fellow manufacturer Citroen in quitting at the end of the season - leaving Honda and Volvo as the WTCC's remaining factory participants for 2017.
The team had informed its drivers Nick Catsburg, Gabriele Tarquini and Hugo Valente last week that they were free from their contracts.
Francois Ribeiro, head of WTCC promoter Eurosport Events, thanked Lada for its involvement in the championship and said he was working with the FIA on the future direction of the WTCC.
"Manufacturers will always come and go in motorsport and the current period is definitely not an easy one for world championships in which car manufacturers are directly involved as factory teams," he said.
"Even though Lada's domestic market share is holding up with a new range of products, the Russian automotive market has declined by 50% over the last two years.
"The WTCC has certainly helped Lada to transform its image and positioning and we wish to thank them for their long-term support of the championship.
"Eurosport Events and the FIA are working intensively together on the future of the touring car category.
"Lada realigning its domestic motorsport activities won't affect our motivation to deliver a great 2017 season which should be very open."
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