Spokeswoman Susan McCabe confirmed Blodget's departure, saying he agreed to accept a voluntary separation package the firm offered to employees a few weeks ago.
She would not comment on the value of the package. Published reports put it around $2 million.
Blodget grabbed the spotlight covering the Internet sector, most famously by predicting that Amazon.com would hit $400 a share.
But since the Internet bubble burst, he has come in for a share of the blame heaped on analysts who many felt had overhyped the sector.
His firm settled one case against him, to the surprise of many on Wall Street. The criticism of analysts extended beyond Blodget and drew the attention of Congress and industry groups. Merrill and several other firms have since announced policy changes designed to ensure the independence of analysts' research.
"Henry Blodget is a highly respected analyst who has contributed a great deal to the building of our technology research effort and will be missed," McCabe said. "We wish him well in future endeavors."
McCabe said the brokerage house had not decided who would pick up Blodget's coverage, or whether Merrill Lynch would continue to follow all the companies Blodget researched.
She said the move was a "lifestyle choice" for Blodget, who is working on a book for Random House.