Following its 16-year partnership, the sponsorship agreement will see a number of changes after a decision was taken to divert some of the brand's support budget into different areas, according to a spokesman.
The brand will step aside as shirt sponsor and become the "official spirit" partner of Scottish Rugby until May 2009. The whisky will also be the official sponsor of the Scotland team for games against Ireland and South Africa in the build up to the Rugby World Cup, and until the tournament finishes in October.
Bill Farrar, group sales and marketing director of The Edrington Group, said: "The Scotch whisky industry has evolved over the last 16 years and there are now a number of international opportunities for growth that require investment by The Famous Grouse.
"We feel therefore, that it's an appropriate time to stand aside from the high profile association with the shirt and allow Scottish Rugby to explore other potential opportunities in this area."
Scottish Rugby is also currently talking to a number of prospective new shirt sponsors.