McLaren and the Japanese manufacturer joined forces in 2015, renewing a partnership that had yielded four consecutive constructors' titles in the late 1980s and early 1990s, but the team has struggled to compete with an engine that has lacked power and reliability.
Star driver Fernando Alonso has suffered eight retirements this season to date, and the team currently lies second to last in the 2017 constructors' championship.
"For a combination of reasons our partnership has not flourished as any of us would have wished," McLaren's executive director Zak Brown said in a statement on the McLaren website
"It is certainly not for the want of effort on the part of either Honda or McLaren, but the time has come to move ahead in different directions.
"As fellow racers, we hope to see the great name of Honda get back to the top -- our sport is better for their involvement. I know this view is shared by everyone in the sport."
Three-year Renault deal
The announcement of the split with Honda was quickly followed by news that McLaren has signed a three-year engine deal with Renault starting in 2018.
The switch to Renault is likely to ensure that McLaren retain the services of Alonso -- the two-time world champion told CNN in July that his decision to stay at the British team will be based on how competitive they are.
After consistently struggling with Honda power, Brown is hopeful the new partnership with the French engine manufacturer will provide some much needed stability and a bit more va-va-voom.
"Today's announcement gives us the stability we need to move ahead with our chassis and technical program for 2018 without any further hesitation," Brown said in a statement.
"We're convinced that we can bring real value to Renault Sport Racing as we work alongside it to develop this current power unit into a regular race winner."
A McLaren driver last took the checkered flag five years ago -- Jenson Button winning the 2012 Brazilian Grand Prix -- and the last of their eight constructors' titles came back in 1998, powered by a Mercedes' engine.
The switch to Honda three seasons ago heralded the arrival of Alonso from Ferrari who teamed up with Button under then team boss, Ron Dennis.
On paper, it looked like the perfect combination but it quickly turned into a nightmare on track.
Button and Alonso suffered 13 retirements between them during the 2015 season as McLaren limped to ninth place in the constructors' title race -- the same place they find themselves this season with seven races to run.
Sainz switches to Renault
In a flurry of announcements, Friday, it was also confirmed that Toro Rosso driver Carlos Sainz will move to the Renault F1 Sport for the 2018 season.
Britain's Jolyon Palmer will make way for the 23-year-old Spaniard, who is the son of former double World Rally champion Carlos Sainz, at the French team as part of a loan deal where he will partner Nico Hulkenberg.
"Carlos Sainz is a very promising driver who has been on our radar for some time, especially after his successes in Renault junior formulae," said Cyril Abiteboul, managing director of Renault Sport Racing's managing director said in a statement.
"We feel that Nico and Carlos will complement each other on and off track and the combination should help us push forwards on the grid.
"I would like to thank Helmut Marko (Red Bull's motorsport advisor) for loaning Carlos to us for this period. We must thank Jolyon for his ongoing hard work with the team and his efforts over the past two seasons. He is a dedicated driver and we wish him the best in the next steps of his career."
Sainz, who has recently expressed a desire to race in a more competitive car, took to Twitter to express his gratitude and excitement at the opportunity, posting a picture of him as a boy sitting in Renault's 2005 championship winning car.
"Who would have thought that this young boy of 11 years old would later go on to drive for this team. It will be great honor. Thank you," he tweeted.
Meanwhile, Toro Rosso has announced that they will be switching from Renault to Honda-powered engines
from 2018 onwards, ending a three-year association with the French manufacturer.
Singapore GP contract renewed to 2021
F1 bosses have also announced that the Singapore Grand Prix will remain on the F1 calendar for a further four years.
Debuting in 2008, the race around the Marina Bay Street Circuit under the floodlights provides a unique atmosphere and is hugely popular with both drivers and fans.
"The Singapore Grand Prix is a signature Formula 1 race and therefore we are very pleased that it will continue to feature on the calendar for a further four years," F1 CEO and chairman Chase Carey said in a statement, Friday.
"We are looking forward to offering our continued support to make the next four years even more spectacular and exciting."
Singapore is hosting round 14 of the 20-race 2017 season on Sunday, with the drivers' championship poised for another twist in a compelling battle between Ferrari's Sebastian Vettel and Mercedes driver Lewis Hamilton.
After leading for most of the season, Vettel was finally overtaken by Hamilton at Monza earlier this month -- the Briton's commanding Italian Grand Prix win means he takes a three-point lead to Singapore, a track that traditionally has favored the Ferrari driver -- Vettel has four victories compared to Hamilton's two.