Orban announced the decision in a letter to the chairman of the EPP, Manfred Weber, on Wednesday, making good on his threat to leave the grouping over changes to its rules.
Hungarian Prime Minister Viktor Orban's Fidesz party has quit the centre-right European People's Party in the European Parliament amid a suspension row with fellow MEPs.
Orban announced the decision in a letter to the chairman of the EPP, Manfred Weber, on Wednesday, making good on his threat to leave the grouping over changes to its internal rules.
The changes, which were voted in by the EPP on Wednesday, allow it to suspend entire political parties rather than just individual MEPs.
Orban said that the reforms "are clearly a hostile move against Fidesz", which had been sanctioned by the EPP since March 2019 for its anti-Brussels stance.
In his letter on Wednesday, the leader said that the rules were "undemocratic, unjust and unacceptable" at a time when "hundreds of thousands of Europeans are hospitalised and our doctors are saving lives."
It was shared by Fidesz vice-president Katalin Novak on Twitter, who said the party "will not let our MEPs be silenced or limited in their capacity to represent our voters".
The EPP said in a statement it "respects and welcomes the majority vote on the adoption of the new rules of procedure" in the European Parliament.
On the Hungarian party's departure from the group, it added that Fidesz "is now facing an exclusion procedure from the party, under Article 3 of the EPP Statutes" and "this must be decided by the EPP Political Assembly, which will meet when it is safe to do so given the current pandemic situation".
Orban's move will have little consequence for Fidesz or for the EPP, which will retain its status as the largest political grouping in the European Parliament even without the 12 Hungarian MEPs.
One Hungarian MEP, with the Christian Democratic People's Party (KDNP), which is a coalition partner of Fidesz, will remain part of the EPP.
The rule changes were voted into force by 82% of members of the EPP. In response to the Orban letter, Esther de Lange, of the Dutch CDA, said that Fidesz's departure was "inevitable."
"Mentally, we had already said goodbye to him," she said.
"Our door is open to all parties who agree with the core values of the EPP. In recent years, Orban has unfortunately drifted miles away from these core values, crossing a moral boundary time and time again."
Since becoming prime minister a decade ago, Orban has regularly clashed with the European Union over issues of judicial reform, media freedom and the rule of law.
In 2015, his hardline reactions to the migrant crisis saw Hungary's response sanctioned by the European Court of Justice.