The actor, who has played the Doctor since 2013, made the shock announcement during an interview with Jo Whiley on her BBC Radio 2 show.
The 58-year-old star was talking about the forthcoming tenth series of the long-running BBC sci-fi drama, when he revealed it would be his last.
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BBC
“I feel it’s time to move on,” he said.
“I feel sad, I love Doctor Who, it is a fantastic programme to work on.
“I can’t praise the people I work with more highly, but I have always been someone that did a lot of different things.”
The Glasgow-born star, who is the 12th actor to play the Doctor, said his final ever scenes will air at Christmas, but reassured fans that he was still Doctor Who at the moment, as filming was still underway.
The next series will also be the last with lead writer and executive producer, Steven Moffat, at the helm.
He praised Peter’s “fiery” portrayal of the Doctor over the last three years.
“Peter’s amazing, fiery, turbulent Doctor is still fighting the good fight, and his greatest adventures are yet to come,” he said. “Monsters of the universe, be on your guard - Capaldi’s not done with you yet!”
He added: “Like Peter, I’m facing up to leaving the best job I’ll ever have, but knowing I do so in the company of the best, and kindest and cleverest of men, makes the saddest of endings a little sweeter.”
Charlotte Moore, director of BBC Content, said: “He has been a tremendous Doctor who has brought his own unique wisdom and charisma to the role.”
‘Doctor Who’ was first broadcast in 1963 and underwent a relaunch in 2005.
Prior to playing the Time Lord, Peter was previously best known for his role as foul-mouthed spin-doctor Malcolm Tucker in the BBC series ‘The Thick of It’.
'Doctor Who' Celebrity Appearances
Anne Robinson(01 of11)
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Anne voiced a robot version of herself, the hillarious Anne Droid, in the episode 'Bad Wolf'. The Anne Droid fronts a dystopian version of 'The Weakest Link', who obliterates contestants with a laser, rather than the 21st century Anne's acidic putdowns.The episode also saw Davina McCall playing a Davinadroid, who hosted a futuristic version of 'Big Brother' (we suppose that would be an Emmadroid now...). (credit:BBC)
Peter Kay(02 of11)
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Beneath those alarming prosthetics sits Peter Kay, who went all out for his appearance in the episode 'Love & Monsters'.The Northern comedian played The Abzorbaloff, who masqueraded as a human being, in an episode in which The Doctor and his companion featured only briefly.We suppose if you'd splashed out on that costume you'd want it to be seen as much as possible... (credit:BBC)
Kylie Minogue(03 of11)
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Kylie played Astrid Peth, companion to David Tennant's Doctor in the 2007 Christmas special, 'Voyage Of The Damned'.She received a mixed reception for the part, which was created especially for her by producer Russell T Davies, with most of the action taking place on a re-imagined futuristic Titanic.Good boots, too. (credit:WENN)
David Walliams(04 of11)
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Another British comedian who underwent quite the makeover for his 'Who' role.David played the Gibbis in the episode 'The God Complex', a rodent-like alien who encounters Matt Smith's Doctor when he crash-lands in what appears to be an 80s hotel.And you thought 'The Shining' was weird... (credit:BBC)
Suranne Jones(05 of11)
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Suranne had the honour of playing a new incarnation of a 'Doctor Who' staple in 2011, when she took on the role of a humanoid version of the TARDIS.In 'The Doctor's Wife', Surrane plays Idris, a human who takes on the personality of the TARDIS, with Michael Sheen also making a voice appearance in the episode. (credit:BBC)
James Corden(06 of11)
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James played The Doctor's temporary housemate, Craig Owens, in the episode 'The Lodger', which sees The Doctor stranded on Earth, and forced to fit in with everyday humans.He reprised the role in the following series, during which he's married to Sophie (Daisy Haggard), who Matt Smith's Doctor helped him get together with, and they have a baby son. (credit:BBC)
Olivia Colman(07 of11)
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Olivia's 'Doctor Who' role was a fairly ordinary one... oh, unless you count those terrifying gnashers, that is. (credit:BBC)
Keeley Hawes(08 of11)
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Like several guest stars before her, Keeley's appearance in the last series of 'Doctor Who' was only meant to be a one-off stint.However, her appearance as the villainous Ms Delphox was so well-received by Whovians that they can look forward to her reprising the role in the latest series. (credit:BBC)
Derek Acorah(09 of11)
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In a rare moment of self-awareness from Derek Acorah, he appeared in a brief cameo role during the episode 'Army Of Ghosts', joking that he'd no longer be of use once ghosts began to roam the earth.It was a blink-and-you'll-miss-it appearance on a TV screen, but we enjoyed it nontheless. (credit:BBC)
Catherine Tate(10 of11)
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Viewers were so taken with Catherine Tate's portrayal of Donna Noble that she eventually wound up as the Doctor's companion, and went on to become one of the most popular characters of the modern era of 'Doctor Who'. (credit:BBC)
Peter Capaldi(11 of11)
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Does he look a bit familiar to you?Long before he was cast as the Twelfth Doctor himself, Peter Capaldi made an appearance during David Tennant's time as Time Lord, playing Caecillius in an episode set in ancient Pompeii. (credit:BBC)