The Dutchman, who won silver in the Rio 2016 road time trial behind Fabian Cancellara and went on to win the Giro in 2017, made the decision just a day after his Jumbo-Visma team announced he would be part of their Tour de France leadership group this season alongside Primoz Roglic.
Now, his role on the French grand tour is unknown, with Dumoulin having left the team's preseason training camp on unpaid leave.
"I forgot what I actually want within this sport and with my future," he wrote on Twitter. "[B]ecause I don’t have this answer clear for myself I’m actually also not doing the best for the people around me," he added.
Dumoulin also said that deciding to take the break had been a "big weight [off] my shoulders", and that his Jumbo-Visma team were part of the decision.
The 30-year-old, who signed a three-year contract with Jumbo-Visma prior to the 2020 season, was a key part of Roglic's yellow jersey push in last season's Tour before the Slovenian finished second. Dumoulin himself placed seventh overall, somewhat of a bounce-back after an injury-hit 2019.
Speaking on a video released by Jumbo Visma, he said he had decided to take this break now as "for too long, I have cared about what everyone thinks; it's about time I figure out for myself what I want.
"Everyone in the team, all my teammates and especially myself, no one benefits at all from me stumbling on now and eventually ending up 12th in the Tour and then fifth at the (Tokyo 2020) Olympics. That would not help us.
"I've stumbled on for too long with those doubts in the back of my mind.
"For a long time, I tried to think maybe if I just start cycling again – I mean, I still like cycling – maybe if I go to training camp, the right feeling will come back. And hope every time that it will be different.
"Now, I was at training camp again with the team and I find myself thinking I just can't find the answer while I'm still on this train. I need time to get out and think, on the platform. Maybe I will catch the same train in two months' time with fresh courage and a good mood, and maybe I will catch a completely different train. I don't know yet."
Jumbo-Visma sporting director Merijn Zeeman said: "People always come before the athletes. We've said that for a long time.
"We gave Tom all the help he needed last season already. In the end, the same question kept coming up (…) We support him (in taking a break), we have shown understanding for it."