In a statement issued just as Prime Minister Justin Trudeau was swearing in a new federal cabinet on Tuesday that did not include him, Dion said while he enjoyed the "incredible adventure" of public life, he now will be pursuing his future outside active politics.
He had said Canada could not accept the billionaire Republican's threat to ban Muslims from entering the United States.
Stephane Dion, a former Liberal leader, will also depart from politics though his new role is unclear.
There have been rumours that Dion might become ambassador to France but sources suggest he may be named ambassador to the United Nations.
There will be new faces at foreign affairs, worldwide trade, labour, democratic reform and immigration where an MP who arrived in Canada from Somalia as a refugee will take over. It is said Ms.Freeland has been quite successful in the portfolio of worldwide trade.
Toronto MP Ahmed Hussen is the new Immigration Minister, replacing veteran cabinet minister John McCallum, who is to be Canada's next ambassador to China.
Freeland is credited with stickhandling through some last-minute hurdles that recently jeopardized the Canada-European Union free trade agreement - an experience that could be valuable in dealing with the incoming Donald Trump administration.
Quebec MP Francois-Philippe Champagne has been named global trade minister.
Ontario MP Karina Gould will become democratic institutions minister.
The moves are believed to better position Canada in what will be a new relationship with the US administration soon to be headed by incoming president Donald Trump and the Republican party.
The Honourable MaryAnn Mihychuk has served the government with distinction and oversaw a significant expansion of the Canada Summer Jobs program and settled the Canada Post labour dispute as Minister of Employment, Workforce Development and Labour.