Ferrari will quit Formula One at the end of this season if plans for a budget cap for 2010 are not abandoned, the champions said on Tuesday.
Toyota and Red Bull, who also own Ferrari-powered Toro Rosso, have already threatened not to enter next year's championship unless the new rules published by the governing International Automobile Federation (FIA) are changed.
"If the regulations adopted for 2010 will not change, then Ferrari does not intend to enter its cars in the next Formula One World Championship," a statement said.
The FIA, headed by Max Mosley, want to introduce an optional 40 million pound budget cap next year to encourage new teams to enter.
The plan would allow capped teams to operate with far greater technical freedom than those continuing with unlimited budgets.
Ferrari's president Luca di Montezemolo, head of the Formula One Teams' Association (FOTA), has warned it would create a two-tier championship that could be "fundamentally unfair and perhaps even biased."
The Ferrari board backed his stance at a meeting at Maranello.
"For the first time ever in Formula One, the 2010 season will see the introduction of two different sets of regulations based on arbitrary technical rules and economic parameters," the statement said.
"The board considers that if this is the regulatory framework for Formula One in the future, then the reasons underlying Ferrari's uninterrupted participation in the world championship over the last 60 years...would come to a close."
The FIA has set a deadline of May 29 for teams wishing to compete in 2010 to submit entries and state whether they want a cap or not.
"The FIA has nothing to add to the letter sent to Ferrari on April 29," a spokesman said when asked about Tuesday's development. Mosley wrote to Montezemolo last month rejecting his concerns about the cap.
Glamour team Ferrari have been in Formula One since the first championship race in 1950 and, with the Monaco Grand Prix, have long been seen as the jewels in the crown. They have been champions eight times in the last 10 years.
Ferrari have struggled this season, however, and are seventh in the constructors' standings after five races. The sport has been turned upside down by a raft of new technical rules and cost cuts to help beat the recession.
The Italian team have threatened to withdraw in the past, most recently in October after Mosley made proposals for a standard engine for all teams.
Mosley said recently that he was locked in a power struggle that he intended to win.
"The sport could survive without Ferrari," he said. "It would be very, very sad to lose Ferrari. It is the Italian national team."
Formula One's commercial supremo Bernie Ecclestone made clear last weekend that he was not prepared to let that happen: "Formula One is Ferrari and Ferrari is Formula One, it's just a marriage made in heaven," he said.
The Ferrari board also said it was disappointed about the way the FIA was taking decisions of such a serious nature.
"The rules of governance that have contributed to the development of Formula One over the last 25 years have been disregarded, as have the binding contractual obligations between Ferrari and the FIA itself regarding the stability of the regulations," the statement added.
"Ferrari trusts that its many fans worldwide will understand that this difficult decision is coherent with the Scuderia's (team) approach to motor sport and to Formula One in particular, always seeking to promote its sporting and technical values."