World number two Scott ended his wait for a first major when he won the 2013 Masters with Williams on the bag last year and also topped the world rankings for the first time in his career earlier this year.
Williams, who previously caddied for Tiger Woods, revealed at the start of this year that he planned to make 2014 his last year as a caddie as he is keen to spend more time with his family in New Zealand.
And it was announced on Wednesday that the pair will no longer work as a team.
Williams said: “After discussing this in detail with Adam it became evident that my plan was not going to fit with Adam's requirements so we decided to end our partnership.”
Australian Scott expressed his gratitude to Williams, who revealed he will consider continuing caddy duties on a part-time basis, and will now seek a replacement.
"Steve has been an integral part of my team in a period where I have fulfilled some of my lifetime golfing goals," Scott said.
"His dedication and professionalism have been without question, and his friendship is highly valued.
"Our priorities and stages of life are different now, and so we decided that this is the best time to end our partnership."