The social networking site has responded to a proposed law which would require the platform to pay news publishers for their content.
In a blog post, William Easton - Managing Director, Facebook Australia & New Zealand - wrote: "The proposed law fundamentally misunderstands the relationship between our platform and publishers who use it to share news content.
"It has left us facing a stark choice: attempt to comply with a law that ignores the realities of this relationship, or stop allowing news content on our services in Australia.
"With a heavy heart, we are choosing the latter."
Easton insisted Facebook's "business gain from news is minimal".
He continued: "News makes up less than 4% of the content people see in their News Feed.
"Journalism is important to a democratic society, which is why we build dedicated, free tools to support news organisations around the world in innovating their content for online audiences."
While news content will be restricted, Facebook won't be limiting its wider services in Australia.
Easton clarified: "The changes affecting news content will not otherwise change Facebook’s products and services in Australia.
"We want to assure the millions of Australians using Facebook to connect with friends and family, grow their businesses and join Groups to help support their local communities, that these services will not change."