He and his Lord's Resistance Army (LRA) group had become "weak", and no longer threatened Uganda, it added.
The LRA was notorious for chopping off people's limbs and abducting children to use as soldiers and sex slaves.
Mr Kony, wanted on war crimes charges, first emerged in Uganda but fled more than a decade ago.
He and his fighters roamed the jungles of the Democratic Republic of Congo, before moving to CAR.
The International Criminal Court issued an arrest warrant for him in 2005, accusing him of war crimes.
Kony2012, a video made by US-based activists calling for the world to capture Kony, went viral in 2012.
The Ugandan army, backed by US special forces and African Union (AU) troops, have been searching for him in CAR since 2012.
The US withdrew its forces last month.
Several of the LRA's top commanders have surrendered, including Dominic Ongwen who is on trial at the ICC on charges of war crimes and crimes against humanity.
In a statement, Uganda's army said it had "successfully achieved" its mission to "neutralise" the LRA and its troops would withdraw from CAR.
"Joseph Kony with less than 100 armed fighters is now weak and ineffective. He no longer poses any significant threat to Uganda's security and northern Uganda in particular," it added.
The LRA was formed in Uganda more than two decades ago, and claimed to be fighting to install a government based on the Biblical 10 Commandments.
It operated mostly in the north, where hundreds of thousands of people were displaced by the conflict.
Ugandan troops have pulled out of the hunt for rebel leader Joseph Kony in the Central African Republic (CAR), the army has said.