Ruan Pienaar will leave Ulster at the end of the 2016/17 season, even though both player and club were keen for him to stay.
The South Africa international has been with Ulster since 2010, scoring 777 points in 118 competitive games, but the club announced his contract had not been extended due to the Irish Rugby Football Union's succession policy.
— Ulster Rugby (@UlsterRugby) August 31, 2016
They said operations director Bryn Cunningham and director of rugby Les Kiss had worked with the IRFU for six months to find a solution, but to no avail.
Pienaar said: "I am not moving on for a new adventure or for financial reasons - I wanted to stay and I know that Ulster Rugby did everything it could to keep me in Belfast. Ulster is special to me and my family now.
"I have many great memories of my time here and I have made some brilliant friends within rugby and outside of it. It is sad that this will be my last season as an Ulster player, but I will be doing everything to ensure that we make it a successful campaign."
Kiss described Pienaar as "an outstanding servant" to Ulster.
Ulster chief executive Shane Logan added: "Ruan's exploits on the pitch are well-documented, but perhaps his biggest contribution since his arrival in Ulster has been his work with the local community.
"He has been freely giving so much of his time and he has helped to inspire young people across the province, not only in rugby, but in their everyday lives. That impact is something that cannot be easily measured."
The IRFU has responded to Ulster's declaration that they wanted to retain Pienaar, saying that "it is vital for both Ulster and Irish rugby that the province develop indigenous talent" at scrum-half and insists that an extension of the player's contract would prevent Irish qualified players from maximising their potential.