The Jumbo-Visma rider fell out of contention for the general classification on stage two and said he has been struggling with fatigue after an intense period of racing.
Dutchman Dumoulin has struggled through injury and illness in the last two seasons, and pulling out of the Vuelta is the latest blow to his Grand Tour ambitions.
In a statement posted on social media before stage eight, Dumoulin said: “We have decided that I will leave the Vuelta. Both our coaching staff and I think it is the best choice to get off the bike. At the start of the Vuelta I already felt tired and that feeling remained. It makes no sense for me to continue, because then I might put a strain on next season. It is not desirable to leave the Vuelta, but this is the right choice. We can all agree on that.
“With Primož Roglič we are in good shape in the general classification, hopefully the team can take home the win.”
Dumoulin has had a mixed season so far, as he returned from a lingering knee injury suffered in the 2019 Giro d’Italia and then suffered from an illness in early 2020.
The 29-year-old returned to Grand Tour racing at the Tour de France early this year, where he fell out of contention for the yellow jersey on stage eight to Loudenvielle, but eventually clawed time back to finish seventh in Paris.
Dumoulin then raced the World Championship time trial and road race, followed by the Ardennes Classics, before lining up in Spain.
But he fell out of the GC race in the Vuelta on stage two, when he lost eight minutes to his rivals.
Dumoulin said he was just hoping to make it through the race, after a tough year.
He said after stage one: “I just don’t feel one hundred percent, just a little tired. I hope I can get through this round.”
Jumbo-Visma will once again rely on reigning Vuelta champion Primož Roglič, who had been leading this year’s edition until a problem with his rain jacket caused him to lose time on stage six.
Roglic is still Jumbo-Visma’s best-placed rider overall heading into stage eight in fourth place, 30 seconds off the race lead.