"I declare on behalf of the Wagner fighters, on behalf of the Wagner command, that on May 10, 2023, we are obliged to transfer positions in the settlement of Bakhmut to units of the defence ministry and withdraw the remains of Wagner to logistics camps to lick our wounds," Prigozhin said in a statement.
"I'm pulling Wagner units out of Bakhmut because in the absence of ammunition they're doomed to perish senselessly."
Prigozhin said they were ending their involvement in the longest and bloodiest battle of the war because of heavy losses and inadequate ammunition supplies. He asked defense chiefs to insert regular army troops in their place.
It was not clear if his latest statement could be taken at face value, as he has frequently posted impulsive comments in the past. Only last week he withdrew one statement he said he had made as a "joke".
Earlier on Friday he appeared in a video surrounded by dozens of corpses he said were Wagner fighters, and was shown yelling and swearing at Defense Minister Sergei Shoigu and Chief of General Staff Valery Gerasimov.
"We have a 70% shortage of ammunition. Shoigu! Gerasimov! Where is the ******* ammunition?" he shouted into the camera. His tirade contained a torrent of expletives that were bleeped out by his press service.
The Kremlin declined to comment on Prigozhin's statement, citing the fact it was related to the course of its "special military operation" in Ukraine.
The written statement was accompanied by a video from Prigozhin in which he appeared in full combat gear in front of dozens of his fighters, an automatic rifle dangling from his shoulder.
Prigozhin said he expected to face criticism.
"After a while, there will be clever people who say that we should have stayed in Bakhmut longer," he said. "Whoever has critical remarks - come to Bakhmut, you're welcome, stand up with guns in your hands in place of our killed comrades."
He also promised that Wagner would be back: "We will lick our wounds, and when the Motherland is in danger, we will rise again to defend it. The Russian people can count on us."
Bakhmut, a city of 70,000 people before the start of the war, has taken on huge symbolic importance for both sides because of the sheer intensity and duration of the fighting there.