Rahm's lawyer, John Beck, confirmed the Spaniard's decision during a hearing in the US Bankruptcy Court for the District of New Jersey on Wednesday.
“Mr Rahm has independently reviewed the proposed terms of LIV 2.0 … and has determined that those terms are unacceptable to him,” Beck told the court.
Rahm rejects LIV 2.0
The proposed next phase, referred to as LIV 2.0, is being developed as the league attempts to restructure following its Chapter 11 bankruptcy filing.
Rahm, one of LIV Golf's biggest stars, has decided that he will not participate in the restructured version of the competition.
His representatives and LIV are reportedly working towards a separation agreement, with a deal expected to be finalised in the coming days.
The decision is a significant setback for LIV because Rahm has been one of the circuit's most successful and recognisable players since joining in late 2023.
Three consecutive LIV individual titles
Rahm's departure comes after a remarkable run of success on the breakaway tour.
The Spaniard won three consecutive LIV Golf individual season titles, establishing himself as the league's dominant player since his arrival.
He joined LIV shortly after winning his second major championship at the 2023 Masters, becoming one of the most prominent players to leave the PGA Tour for the Saudi-backed circuit.
His departure therefore removes one of LIV's central sporting attractions just as the organisation attempts to secure its future.
LIV fighting for survival after bankruptcy
LIV Golf entered Chapter 11 bankruptcy proceedings after Saudi Arabia's Public Investment Fund withdrew its financial support following the 2026 season.
The PIF had invested approximately $5 billion in LIV over four years, according to reports.
The league has since secured a potential $300 million financing package from BC Partners Credit, intended to help it emerge from restructuring and continue into the 2027 season. The proposed new model would give players equity in the league and its teams.
Rahm's decision comes at a particularly difficult moment for LIV as it seeks to persuade its leading players to commit to the new structure.
Rahm's future remains unclear
Despite leaving LIV, Rahm's next competitive destination has not yet been confirmed.
The Spaniard resolved his dispute with the DP World Tour in May after agreeing to pay outstanding fines and participate in a minimum number of tournaments, restoring his eligibility for the 2027 Ryder Cup.
A return to the PGA Tour is also complicated.
Rahm previously declined a specially created PGA Tour reinstatement programme, meaning he would face a mandatory suspension before becoming eligible to return under the existing rules. Current reports indicate that he could not return to PGA Tour competition until late August 2027.
More LIV stars facing uncertain futures
Rahm is not the only high-profile LIV player whose future is uncertain.
Sergio Garcia has been granted a route to terminate his LIV contract, while Bryson DeChambeau and Cameron Smith are also considering their options amid the restructuring.
Meanwhile, Patrick Reed has already left LIV and is preparing for a permanent return to the PGA Tour in 2027.
Rahm's exit could therefore accelerate the reshaping of professional men's golf as players weigh the financial and sporting terms available across the different tours.
A major blow to LIV Golf
Rahm's decision represents one of the most significant departures in LIV Golf's short history.
The two-time major champion was one of the league's marquee recruits and subsequently became its three-time individual champion.
With the future of LIV 2.0 still being negotiated, losing Rahm leaves the organisation facing an even greater challenge to retain its biggest names and establish a sustainable model for the 2027 season.