The 31-year-old German has been competing full-time in the world championship for six years and, despite coming off the back of the best season of his career, has decided enough is enough.
"This is the hardest day of my life", said Heidolf. "This decision is not easy, but personally I have to say that I have reached the point where I cannot continue in the same way.
"I am tired of explaining all the time what went wrong. I want to thank my team and all the support they gave me over the past few years and say that I really appreciate it, but this is the day I say goodbye to active racing and look forward to new responsibilities in my life."
Season 2007
250s: Another operation for Locatelli
21/12/2007 AT 09:19
Heidolf made his world championship debut in the 125cc class in 1997 as a wildcard at the Sachsenring, but failed to finish the race.
Another effort the following year and three wildcard entries in the 250cc event between 1999 and 2001 finally saw him take his opportunity for a full-time ride in the latter class in 2002.
Through his six seasons in the class he rode both Aprilia and Honda machinery.
A ninth place in Portugal in his maiden campaign was his best result in 90 starts, while 2007 with the Kiefer Bos team was his best overall season as he took 19th in the points.
His new role as team manager of the Germany Racing Team means he will oversee their progress in the European 250cc championship and probably enter the team on a wildcard basis in up to three Grands Prix this year.
Season 2008
Hayden demands Honda improvements
01/03/2008 AT 20:11
Season 2008
Stoner slams Losail gravel traps
01/03/2008 AT 14:36