The Portuguese prime minister, Pedro Passos Coelho, said his country will make a "clean" exit from the three year €78bn troika bailout without a precautionary line of credit.
Passos Coelho said an exit without the safety net of additional international support was the choice that would "best defend the interests of Portugal".
The decision was announced in a national televised address and means the country no longer has to answer to foreign creditors after the bailout ends on 17 May.
The Portuguese leader said "every Portuguese citizen had suffered the painful effects of a crisis that could and should have been avoided".
He acknowledged that difficulties remain for many families across the country, but added that his announcement was a sign that sacrifices had not been made in vain.
Lisbon has been under pressure not to go it alone and, instead, seek a credit safety net from the European stability mechanism, the eurozone's €500bn rescue fund.
The EU, IMF and European central bank have urged the country to consider a line of credit to help ease its return to international capital markets.
However, Siim Kallas, who is now responsible for the commission's economic and financial affairs brief, after Olli Rehn announced his candidacy for the European parliamentary elections said, "The European commission takes note of this decision and, as previously stated, will support the Portuguese authorities and people in this sovereign choice".
Portugal's centre-right government has stuck to the bailout plan and met targets to cut the country's budget deficit.
"Every Portuguese citizen had suffered the painful effects of a crisis that could and should have been avoided" - Pedro Passos Coelho
Joseph Daul, president of the parliament's EPP group welcomed the announcement that Portugal will make a clean exit from programme.
"This is a crucial turning point for a country that bravely endured very hard but necessary measures. Portugal experienced great suffering in its path back to financial stability and the Portuguese people will never forget the price they had pay for the irresponsibility and short sightedness of the Socialists."
"Severe fiscal indiscipline and the uncontrolled accumulation of debt by the socialist government pushed Portugal to the brink of bankruptcy", added the French deputy.
According to Ana Gomes, S&D group and Portuguese Socialist party member, "Portugal is now much more indebted (130 per cent of GDP), with much higher unemployment (15.2 per cent), including 36 per cent youth unemployment, after having destroyed about 6 per cent of the national wealth in the last three years and there are not enough growth perspectives nor job creation perspectives".
"The majority of Portuguese families and SMEs paid a tragic cost with poverty and unemployment levels higher than ever in the last four decades while the rich tax evaders are getting richer and protecting the proceeds of corruption in tax havens", she continued.
"Injustice, inequity and inequality grew with the troika's blessing, the country is now poorer, none of the structural state reforms have been made - namely, that of the justice system - and none of the fundamentals have really improved.
"Yet, the markets, EU neoliberal governments and EU institutions are rejoicing. What is severely shaken is the trust of the Portuguese people in this EU that violates its own values, principles and objectives", said the Portuguese MEP.
Portugal follows in the footsteps of Ireland, which became the first eurozone country to successfully exit a bailout in December.
Lisbon's decision leaves Greece and Cyprus as the only eurozone countries now under assistance, after Spain also exited a bank bailout in January this year.