Prince William is quitting the armed forces and will spend the next 12 months focusing on royal and charitable duties while he decides what work to do in the future.
The transitional year is expected to include a trip to Australia with his wife Kate and little Prince George.
It was always expected the Duke of Cambridge would increasingly focus on royal engagements as the Queen slowed down, but it's understood he is not yet ready to become a "full time royal".
William has worked as an RAF search and rescue helicopter pilot in Wales for the past three years.
During that time he was involved in 156 operations resulting in 149 people being rescued.
But Kensington Palace on Thursday announced "the Duke is to leave operational service in the armed forces".
"He completes his tour with the RAF search and rescue force ... after more than seven-and-a-half years of full-time military service," the palace said in a statement.
In total the Duke has completed 1300 flying hours with the RAF.
Prince William plans to support the Queen and the royal family through a program of official engagements with Kate over the next 12 months.
He'll work with his charity in the field of conservation, particularly in respect of endangered species, as well as helping children, young people and veterans.
As to his long-term future, the palace stated: "The Duke is currently considering a number of options for public service, a further announcement on which will follow in due course."
Royal commentator Richard Fitzwilliams said William was always going to take on more official royal duties as the Queen and her husband Philip aged.
"The next 12 months will be heavily focused on royal duties and charitable work," he told AAP.
"But the prince has also made it very clear he wants to be a modern father so there's no doubt he'll be spending a great deal of time with his son and Kate. It's a modern approach."
Mr Fitzwilliams said the Duke had done extraordinarily well during his military career.
"He would have wished to have been on the front line if he could have been but, being a future heir to the throne, that simply wasn't possible."
William, Kate and baby George are expected to move into their official residence at Kensington Palace within the next few weeks.
The Duke revealed at the Anglesey Show in mid-August that the family plans to visit Australia in 2014.
The royal tour will be reminiscent of the 1983 trip undertaken by Prince Charles and Princess Diana with a then nine-month-old William.