The move came just hours after about 10 people were killed in clashes between armed groups Sunday in the restive Muslim PK5 neighbourhood of the capital Bangui, according to local sources.
The toll had yet to be confirmed by the 10,000-strong UN force MINUSCA, which will be alone after France's departure in facing the militia groups terrorising civilians.
Thousands of people have been killed and 4.5 million forced from their homes since the conflict erupted in 2013.
"The page has been turned," French Defence Minister Jean-Yves Le Drian said at a ceremony in Bangui attended by local officials and foreign diplomats, signalling the official end of the mission called Operation Sangaris.
Sangaris, launched in December 2013 to buttress 12,000 UN troops sent to stabilise the country, had some 2,500 troops at its peak.
"This does not mean the end of military relations between France and the Central African Republic," Le Drian said earlier in a speech to the Central African parliament.
"The French army will indeed be less visible but it will be present, active and vigilant. We're proud of Operation Sangaris, so it's out of the question to allow the gains to be put at risk," Le Drian told MPs fearful of renewed violence.
Residents were continuing to flee the area around PK5 on Monday, fearing further bloodshed. A helicopter from the international force circled over the city from dawn, an AFP correspondent said.
Renewed killings have shaken the country of 4.5 million people, spearheaded by rival Muslim and Christian militia groups.
Many Central Africans are worried to see the French troops go.
Le Drian on Monday held talks with the CAR's President Faustin-Archange Touadera, elected early this year once relative calm was restored, and met officials in MINUSCA.
He vowed that a "tactical reserve force of 350 soldiers" would remain. They will be backed up by drones.
'Pull-out far too early'
Earlier this month Le Drian told the French parliament that the Sangaris mission, backed by a UN mandate, had been "a success" which stopped mass killings and paved the way for presidential and legislative elections.
But prominent CAR politician and former presidential candidate Anicet Georges Dologuele challenged Le Drian's optimism, stating that "Sangaris is pulling out far too early."
"Our security forces are not ready to take over," Dologuele said. "The UN forces are more and more overwhelmed."
"It's always too early," Le Drian countered. "These responsibilities are above all your own."
Two days before Le Drian's arrival, 25 people were killed in clashes in the centre of CAR, including six police officers. The government denounced the violence as a "Machiavellian plot designed by the enemies of peace".
UN vice secretary general Jan Eliasson is also expected in Bangui from Tuesday for a two-day visit, MINUSCA said.
One of the world's poorest countries, CAR has scarcely emerged from the chaos of civil war which erupted in 2013 following the overthrow of former president Francois Bozize, a Christian, by Muslim rebels from the Seleka coalition who installed their own leader.
Armed groups have flourished over the years given the weakness of the state. Among the main culprits are factions from the mostly Muslim former Seleka rebel force, and the Christian "anti-Balaka" militias, a reference tothe machetes used by the rebels.
There are also vigilante groups made up of nomadic, predominantly Muslim Fulani herders, as well as others specialising in highway robbery.