In an official statement, Tyler said: "After some long hard thoughts, I've decided it's time for me to let go of my mistress American Idol before she boils my rabbit.
"I strayed from my first love, Aerosmith, and I'm back - but instead of begging on my hands and knees, I've got two fists in the air and I'm kicking the door open with my band. The next few years are going to be dedicated to kicking some serious ass - the ultimate in auditory takeover.
"Idol was over-the-top fun, and I loved every minute of it... Now it's time to bring rock back."
Mike Darnell, President of Alternative Entertainment at the Fox Network, paid tribute to Tyler, saying: "It's been a tremendous honour to have Steven - one of the most prolific artists in the world - on American Idol for the past two seasons.
"We are very sad that Steven has chosen to focus more on his music, but we always knew when we hired a rock 'n' roll legend, he would go back to the music. We all wish him all the best and would love to have him back on the show anytime."
Idol creator Simon Fuller echoed the sentiment, adding: "If you had told me ten years ago he would be a judge on American Idol, I would have thought it impossible.
"The fact that this became a reality and we had the pleasure of him gracing our stage for two seasons makes me very proud. I completely understand his desire to get back to his life as the singer in America's greatest-ever rock band."