The 52-year-old has helped Wales win three Six Nations Grand Slam crowns since joining as defence coach in 2008 and will be part of outgoing coach Warren Gatland's staff until the World Cup starting on Sept. 20.
"After more than 10 years with Wales this has been an incredibly difficult decision to reach but I won't be renewing my contract," Edwards said in a statement.
"I'd like to thank Warren and the WRU for the opportunity I have had working with the national team."
"We won four Six Nations titles during my time with Wales, but I hope and believe that the best days are yet to come and I'm fully focused on seeing what we can achieve in Japan."
Gatland, who is also set to step down after the World Cup, was pleased that Edwards' future had been settled.
"Shaun has been an important part of the Wales set up over the past 11 years for what has been a hugely rewarding time for Welsh rugby," Gatland said.
"It's pleasing that we can draw a line under the speculation regarding Shaun's future with this announcement and we can look forward to preparing the squad for the RWC and the tournament itself."
Wayne Pivac, who will take over from Gatland, said: "When Shaun's availability post RWC became apparent we worked with him to offer him a new contract which he was happy with and for him to be part of the new look coaching team.
"Shaun has decided not to take that contract, which we must respect and we wish Shaun the best in what lies ahead for him post Wales."
(Reporting by Shrivathsa Sridhar in Bengaluru; editing by Amlan Chakraborty)
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