The 1998 Energy Charter Treaty allows energy companies to sue governments over policies that damage their investment and has in recent years been used to challenge policies that require fossil fuel plants to shut.
Britain said there had been a failure of efforts to modernise the treaty to align it with net zero.
"The Energy Charter Treaty is outdated and in urgent need of reform but talks have stalled and sensible renewal looks increasingly unlikely," the minister of state for energy security and net zero, Graham Stuart, said in a statement.
"Remaining a member would not support our transition to cleaner, cheaper energy, and could even penalise us for our world-leading efforts to deliver net zero."
The government said that after considering the views of businesses, industry and civil society, it would now instigate Britain's withdrawal, which would take effect after one year, removing protections for new investments after this period.
Last July the European Commission proposed that EU countries jointly quit the treaty. Nine EU member states including France, Germany, Spain and the Netherlands have already done so.
