The 27-year-old Canadian, who was subjected to death threats and hired security protection following his crash at last season's Abu Dhabi finale which led to a late safety car and denied Lewis Hamilton a record eighth world championship, exits the grid after three years with Williams.
Latifi has failed to score a point this year, and was outclassed by debutant Dutchman de Vries who stood in for Alex Albon at the recent Italian Grand Prix.
"I would like to take this opportunity to thank everyone at Williams Racing - all the people back at the factory and those I work with trackside - for the last three years," said Latifi.
"My initial F1 debut was postponed due to the pandemic but we eventually got going in Austria and, although we have not achieved the results together we hoped we would, it's still been a fantastic journey.
"Getting those first points in Hungary last year was a moment I'll never forget, and I will move on to the next chapter of my career with special memories of my time with this dedicated team. I know none of us will stop putting in every effort until the end of the season."
Williams, who have already confirmed Albon will be retained for 2023, said they will announce their full line-up for next season in "due course".