Uber said it would continue to try to persuade the government to change the rules, but in the meantime it is driving away.
About 2,000 Danish drivers, now employed by the company, will be adversely affected by this decision.
Uber says it will cease operations in Denmark on April 18.
Some Danish government officials, however lamented Uber's departure.
It's expected council members will debate a number of issues, such as the number of Uber vehicles allowed to operate in the city.
The San Francisco-based company said in a blog post that it will close its services on April 18, 2017, as the new laws now being proposed in Denmark will not allow drivers to use their privately owned cars for ride sharing.
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The nationalist Danish People's Party also supported the restrictive new law, with its leader, Kim Christiansen, saying it was "quite excellent" Uber was leaving the country.
Uber has been active in Denmark for three years now, and its app has been downloaded by an estimated 300,000 people in the country. One-upmanship with the law has never gone Uber's way thus far.
Uber's spokesman said the company would retain its 40 engineers in the Danish city of Aarhus, who develop software for the global market. Those drivers were fined in November, and the case against Uber will come to court by the end of April. A license would be required to perform such services.
Uber is closing its business in Denmark after the government tightened regulations and the ride-hailing app suffered a big legal defeat. Because the European Union is one of Uber's largest global markets, a decision could mark a turning point in how the world generally regards the sharing economy.