The 34-year-old will lead England for the final time in their last group match in the tournament against South Africa on Saturday.
Defeat by Afghanistan on Wednesday knocked England out of the Champions Trophy – their third disappointing white-ball event in a row under Buttler following their disappointing defences of the 50-over World Cup in 2023 and the T20 version last year.
“It’s the right decision for me and it’s the right decision for the team,” said Buttler at an unplanned media conference in Lahore.
“I’ve just reached the end of the road.”
He added that he felt England had gone out of the Champions Trophy “with a bit of a hangover from the tournaments before”.
Buttler, one of England’s 2019 World Cup winners, was appointed captain in 2022 after the international retirement of Eoin Morgan.
He won the T20 World Cup that autumn in Australia but England have endured a significant downturn in form since the start of the 2023 World Cup in India.
They won only three of their nine matches there and have lost 12 of their 16 ODIs since then, including a current losing run that stands at six matches.
They reached the semi-finals of the T20 World Cup last year but were well beaten by India and limped through the earlier rounds.
“My over-riding emotions are sadness and disappointment, but I’m sure in time that will pass and I’ll get back to really enjoying my cricket,” Buttler said.
“Also, I’ll be able to reflect on what an immense honour it is to captain your country and all the special things that come with it.”