The 21-year-old singer told reporters after Wednesday's finale show that she will dedicate the coming new year to music, according to the Hollywood Reporter.
"I started the show being a singer and a musician, and so I'm going to go back to that," Lovato told reporters. "It's been really great, but I'm so excited for 2014. I'm going to dedicate it completely and entirely to music -- touring and making a new album. Possibly releasing one."
A source close to production confirmed Lovato's plans to exit. The singer/actress is set to embark on her Neon Lights tour in support of her latest album, "Demi," in February.
Lovato joined "The X Factor" ranks -- along with Britney Spears -- in 2012 as the "American Idol" wannabe entered its second season and quickly earned a reputation for her often brutal honesty.
Fox had no comment regarding Lovato's departure. Requests for comment from Lovato and "X Factor" creator and fellow judge Simon Cowell were not immediately returned.
Of course, Lovato's exit is the least of the show's worries. The future of the low-rated singing competition show is up in the air. It's third season wrapped up Wednesday without much fanfare, pulling in about 5 million viewers. It has not yet been renewed by Fox.
Changes coming to the show were hinted at earlier in the week. In a conference call with reporters on Monday, Cowell, who seemed to think the show would return, said his role could change: "I might have a different kind of role -- we haven't discusses that yet." And he had also noted that changes would come to the format of the show as well as the judging panel.
But will people be tuning in to find out?