Soldiers have spent the last 38 years in action in Northern Ireland
Operation Banner - the Army's support role for the police - has been its longest continuous campaign, with more than 300,000 personnel taking part.
A garrison of 5,000 troops will remain but security will be entirely the responsibility of the police.
British troops were sent to Northern Ireland in 1969 after violent clashes between Catholics and Protestants.
When the first soldiers were deployed in August 1969, commanders believed they would be in Northern Ireland for just a few weeks.
BBC Ireland correspondent
But the Army quickly became involved in what came to be known as Operation Banner.
A total of 763 military personnel were killed during the campaign.
At the height of the Troubles, there were about 27,000 soldiers in Northern Ireland. From Wednesday, there will be no more than 5,000.
The head of the Army in Northern Ireland, General Nick Parker, said the operation helped create the conditions for a political solution.
"What I believe the military have done here is make a significant contribution to the security in Northern Ireland that has allowed other people to make the difference through politics, social programmes and economics," he said.
Jeffrey Donaldson, DUP, paid tribute to the Army.
"If they had not been here to hold the line against terrorism, I don't think we would have made the progress that we have made," he said.
"I think that we owe them a great debt of gratitude for a huge sacrifice that they have paid to help make this possible."
Gerry Kelly, Sinn Fein, said it was the government who made decisions concerning the Army.
"Was there a honeymoon period when people were relieved that they weren't the heavily armed RUC? Of course there was," he said.
"That was short lived. The reason why is because they are an Army, a blunt instrument, it was the British government who made the decision to use them against republicans, nationalists and Catholics."
In future, soldiers based in Northern Ireland will be involved in training and will be available for deployment in foreign trouble spots, not on local streets.