"We couldn't come to terms with my deal with ABC, so next year I'm not going to be on 'The View.' However, I will be coming back and guest hosting," she said. "I'm not going to do the everyday thing because they wanted me three years, I wanted one year.
"I'm not going away, I'm just not going to be here everyday."
"I am sad," said her co-host Barbara Walters, after the announcement. "I hoped that it would be more than one year. We have had — to say the least— an interesting year. You've had an exciting, fun filled, provocative (year) we have all loved it, we have all gotten together and you will be missed very much."
Walters stressed that she wasn't involved in the negotiations with her co-host.
"I would like to make one thing perfectly clear," she said. "I do not participate in the negotiations with Rosie. It's ABC daytime. I'm going to read, 'I did this, I did that,' brings back a lot of other things I was accused of doing and did not do. It was between your representatives."
Photos: Rosie O'Donnell
O'Donnell told the audience that she'd still be writing on her blog regularly. "They're not kicking me out, don't worry," she said.
One audience member said that she guessed before the show that something big was going to happen.
"I was interviewed on my way in to the show, so I sort of expected something was up," Amanda Tolino told The ShowBuzz.
"I'm shocked," said Angelique Donato, who was also in the audience. "I'm not happy. She's a big asset to the show."
O'Donnell said that she's been keeping this secret for a while.
"During one of the breaks, she said she knew for two weeks but couldn't say anything," said Tolino. "She's the main reason I watch the show, but it will still go on after I'm gone."
ABC announced Wednesday morning that O'Donnell is leaving the show after only one controversial season because the network wasn't able to come to terms on another contract with her. Her last day will be sometime in the middle of June.
The president of ABC's daytime programming said they knew when they first hired O'Donnell that anything longer than a one-year stay would be "gravy." He said he hopes O'Donnell will do a series of one-hour specials for the network and maybe even guest-host once in a while.
Photos: Donald Trump
O'Donnell made her debut on the ABC chat show Sept. 5, 2006. She filled the spot emptied by Meredith Vieira, who left to join NBC's "Today."
During her time on the show she's voiced her opinions on a slew of issues and people, including Donald Trump, Paula Abdul and Kelly Ripa. Her long standing feud with Trump dominated headlines for weeks.
She took aim at the real estate mogul after he gave Miss USA Tara Conner a second chance after news of underage drinking surfaced.
"He annoys me on a multitude of levels. He's the moral authority? Left the first wife, had an affair; left the second wife, had an affair; had kids both times, but he's the moral compass for 20-year-olds in America?" O'Donnell said at the time.
She also took aim at the FOX network. She called the reality show "American Idol" "racist" and "weightist" for booting 2003 contestant Frenchie Davis, while allowing 2007 contestant Antonella Barba to remain on the reality show after racy photos of her surfaced.