The teen star – who entered treatment for "physical and emotional issues" last October – will not be returning to her hit Disney Channel series, Sonny with a Chance.
"It made sense for me to go ahead and leave the show to focus on my music," Lovato, 18, tells PEOPLE in this week's issue. "It's kind of sad for me that a chapter of my life has ended but there couldn't be a better time for me to move on."
"I don't think going back to Sonny would be healthy for my recovery," says Lovato, who returned to Los Angeles in January after completing three months of residential treatment. "Being in front of a camera would make me nervous."
And she has the support of the Disney Channel.
"We respect Demi's decision to focus fulltime on her music and not immediately return to her acting career," a rep for the Disney Channel said in a statement. "She is a talented young woman and our hearts are with her as she continues to take action to improve her health and bounce back from adversity."
Lovato's career took off after starring in the Disney Channel's 2008 original movie Camp Rock, opposite the Jonas Brothers. Next came Sonny with a Chance, which debuted in 2010.
But even without its main star, the show will still go on: the series is being reinvented as a sketch comedy program called So Random!, which will debut in June.
Lovato, who will continue to record under Disney's label Hollywood Records, calls her decision to walk away from her TV gig "nerve-racking." But, she says, "I'm really excited to see where everything goes."
To learn more about Demi Lovato's struggle with eating disorders, what her life was like in treatment and all about her life now, pick up this week's issue of PEOPLE on newsstands Friday.