"Diesel will be phased out in our passenger cars in 2018," Johan van Zyl, president of Toyota Motor Europe, said in Geneva, where Europe's first major car show of the year opens this week.
"We will not develop new diesel technology for passenger cars, we'll continue to focus on hybrid" vehicles, he added.
An emissions cheating scandal, which blew up at Volkswagen in 2015, has heaped discredit on diesel technology, criticised for belching out nitrogen oxide and harmful particulates.
This has been a major blow for car makers, who had essentially sought to bet the house on diesel as they strove for years to cut CO2 emissions with the support of public authorities.
Major cities including Paris have announced plans to ban diesel, while a top German court last month opened the way for cities to ban older diesel cars from the streets on air quality grounds.
Diesel's fall from grace has pushed manufacturers to turn their attention to producing more in-demand petrol models or make the jump to electric, or at least hybrid, vehicles.
Last year nearly 15 percent of Toyota's sales in Europe were from diesel vehicles, down from 30 percent in 2012.
Meanwhile sales of Toyota's hybrid models have risen sharply.
Toyota vice president Didier Leroy said that back in 2011, before "Dieselgate" erupted, the company had "already started to anticipate the fact that we should not allocate resources to develop a new small diesel engine".