The 47-year-old – who joined the cast as Kevin Wicks in September 2005 – has decided not to renew his contract, provoking Walford executives to axe his on-screen children, Carly and Deano (played by Kellie Shirley and Matt Di Angelo).
Diane Parish – who plays Daniels' screen wife Denise – will also make a temporary exit at the same time while she has a baby in real life.
Speaking of his decision to quit, Daniels told The Sun: "EastEnders has been an absolute pleasure, but it was always my intention, after two years in the job, to move on and do other things.
"I'd like to thank all on the Square for making my stay such fun."
Kellie, 25, commented: "It's a shame the option on my contract hasn’t been picked up, but it wouldn't feel right to remain in the Square without the rest of my family.
"I've not been able to accept work while playing Carly and I can't wait to get my teeth into others roles - but I wouldn't change a thing about my EastEnders experience."
Di Angelo, 19, added: "I've had a really good time at EastEnders and I've learnt so much from the cast."
Phil Daniels, Diane Parish, Kellie Shirley and Matt Di Angelo will continue filming with the BBC soap until November, with their characters remaining on screen until the new year. Diane, however, will return after her period of maternity leave.
Meanwhile, actress Linda Henry – who plays Kevin Wicks' ex-wife Shirley Carter – is sticking with the BBC soap as earlier this month, Bobby Davro signed to appear as Vince Monks, a new love interest for the wayward barmaid.