The team had confirmed 2003 champion Paul Tracy as their lead driver in ChampCar this year.
But, following the series' cessation this week, team boss Gerry Forsythe has been unable to find the finances to secure an entry in the IRL, which has now swallowed up the series formerly known as CART.
"Forsythe Championship Racing is announcing the cessation of its racing operations," said Forsythe's VP of Operations Neil Micklewright.
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"After 13 years of competition in CART and the Champ Car World Series, the team has been unable to secure the necessary sponsorship to be able to compete in the Indy Racing League IndyCar Series in 2008.
The team will have its last race at Long Beach in April, which was unable to be accommodated into this year's IndyCar schedule and will instead run on the same weekend as the Motegi race in Japan.
All the 2007 ChampCar teams are expected to take part using their Panoz-Cosworth cars with points counting towards the IndyCar series.
"Forsythe Racing Inc., the parent company of FCR, will participate in the Toyota Grand Prix of Long Beach, the Champ Car finale, with drivers to be announced," Mickelwright added.
Gerry Forsythe founded the team over the winter of 1995 and saw his squad collect 27 wins through Greg Moore, Patrick Carpentier, AJ Allmendinger and Paul Tracy as well as the 2003 title with the latter.
The team was set to run under the Forsythe Pettit Racing banner this season after Dan Pettit - formerly Kevin Kalkhoven's partner at PKV Racing and briefly the owner of the RuSPORT team - joined forces with Forsythe over the winter.
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