Its decision leaves BatesAsia, Leo Burnett, Saatchi & Saatchi and Ogilvy & Mather to contest the business.
As the incumbent agency, Y&R had been guaranteed a place in the next round of the review.
However, Tanuj Philip, the Y&R Singapore managing director, said: "Having worked together so closely for so long, we believe both parties could benefit from new relationships, new perspectives and new challenges."