The German company said output would end at its plant in Mexico next July after production of celebration models.
The Beetle has its roots in Nazi Germany with the creation of a "people's car", but went on to star in a series of successful Disney films as a vehicle called Herbie.
But sales, particularly in the key US market, have fallen in recent years.
The company say the final Beetle models will be available in both coupe and convertible styles.
"The loss of the Beetle after three generations, over nearly seven decades, will evoke a host of emotions from the Beetle's many devoted fans," said Hinrich Woebcken, chief executive of Volkswagen Group of America.
The Beetle was originally designed in the 1930s by legendary engineer Ferdinand Porsche - a name now synonymous with fast cars - at the behest of Adolf Hitler, who wanted to see a cheap and practical mass-produced car made available to the German people.