The announcement was made just as his final collection for the fashion house was showcased in the Paris Fashion Week presentation.
The show was a celebration of his greatest hits and was carried out entirely in black, as was his first ever show for the label.
The set included props that Marc has used for his shows over the years – a carousel, escalators, a lift, a fountain and a large clock, which was wound back after the show ended.
Marc dedicated the show to the women who have inspired him and "the showgirl in every one of them". He took a bow to rapturous applause and a standing ovation.
Marc, who is good friends with Victoria Beckham, has been the creative director of Louis Vuitton since 1997 and was at the helm of its very first ready-to-wear collection.
He is leaving the brand to focus on his own label, Marc Jacobs and his diffusion line Marc by Marc Jacobs.
With the confirmation of Marc's exit the speculation now focuses on who will be his successor at Vuitton, with rumours indicating that former Balenciaga designer Nicolas Ghesquière is the likely candidate.