The National Party released its party list for the 2023 general election this afternoon and Mr Woodhouse's name was not on it.
"It was clear from the ranking offered that I was not part of the leadership's thinking regarding ministerial positions, so I feel the best thing to do is to stand aside and allow a fresher face into the caucus from the list," he said in a Facebook post.
Mr Woodhouse has been an MP for 15 years.
He is to contest the Dunedin electorate, but seems to have conceded he won't win it from the Labour Party, instead referencing his "departure from political life".
Mr Woodhouse said in his Facebook post he had "no bitterness, just fond memories and fantastic friendships made".
He was "somewhat sad about the process of my departure from political life", but grateful about having had the opportunity to serve.
Dunedin MP David Clark is standing down this election and the Labour Party's candidate is Rachel Brooking.National Party leader Christopher Luxon said he talked to Mr Woodhouse this afternoon.
Mr Woodhouse advised him of his desire to withdraw from the list, Mr Luxon said.
Mr Luxon said he respected Mr Woodhouse's decision.
"I wish him well. He's had a fantastic career over 15 years and he should be very proud about that."
He said Mr Woodhouse had "done it all", holding significant roles in the governments led by Sir John Key and Sir Bill English.
Mr Luxon wished Mr Woodhouse well, including in efforts to campaign in Dunedin.
"I acknowledge it's a tough fight."
"I will talk about Cabinet posts after the election."
Mr Woodhouse was first elected to Parliament in 2008.
He is the Shadow Leader of the House and National's spokesperson for economic development, sport and recreation, and state-owned enterprises.
Mr Woodhouse was born and raised in South Dunedin among eight siblings.
In his maiden speech to Parliament, he said he would "work to encourage policies of aspiration, equity of opportunity, the celebration of success and the compassionate support of those who need government assistance".
"I believe it is the responsibility of government to create an environment wherein its citizens can aspire to achieve all that they can and wish for; it is for individual citizens to seize that opportunity."
After the 2011 general election, he was made the senior government whip for two years.
He became minister of police, and workplace relations and safety, in 2014, and picked up the revenue portfolio in place of police a year later.
In December 2016, the revenue portfolio was replaced by ACC.
Mr Woodhouse has been a prominent critic of government clawbacks to the planned new Dunedin Hospital.
Last year, he pledged to do all he could to ensure it was built as per its original detailed business case.
The project has been facing cost pressures, and this prompted the government to both boost its budget and cut $80 million from what had been designed.
Through the controversy, National showed reluctance to say what exactly it would do about the hospital should the party be in a position to govern from October.
In July this year, it announced a $30m plan to reinstate 23 inpatient beds, two theatres and a PET scanner.
