Wilson Security will withdraw from Australia's offshore detention centres in October 2017.
The security service, subcontracted by centre operator Broadspectrum, confirmed on Thursday it would cease operations on Manus Island and Nauru at the end of its current contract.
Wilson Security said personnel had been provided 24 hours a day since 2012 "to create an environment in which asylum seekers feel safe" at the centres.
"The provision of security services at Regional Processing Centres (RPCs) is not in line with Wilson Security's long-term strategic priorities," the company said in a statement.
"Wilson Security has carried out its contractual obligations to the best of its ability and takes pride in its performance."
However, its four-year service has been marred by controversy including allegations staff abused asylum seekers and a forced apology over guards spying on Greens senator Sarah Hanson-Young during her visit to Nauru.
The announcement follows a decision on August 9 by Spanish infrastructure giant Ferrovial Services, which now owns more than 50 per cent of ASX-listed Broadspectrum, formerly Transfield, to end work for the Department of Immigration and Border Protection in October next year.
"In relation to the provision of services at the regional processing centres in Nauru and Manus province, these services were not a core part of the valuation and the acquisition rationale of the offer, and it is not a strategic activity in Ferrovial's portfolio," the company said in a statement.
Papua New Guinea has already said it will close the Manus Island detention centre after the country's Supreme Court ruled in April it was illegal.
Both Ferrovial and Wilson Security confirmed they would not provide future service to detention centres.
