It follows alleged financial irregularities involving the former monarch.
The royal house said in a statement on Sunday that in addition to renouncing his inheritance, Felipe would strip Juan Carlos of his annual stipend. In 2018, the former monarch received €194,232 (£177,000).
The decision comes amid an ongoing investigation by Swiss prosecutors into an offshore account allegedly operated for Juan Carlos.
The account allegedly received €88m (£80m) from Saudi Arabia’s late King Abdullah in 2008, which prosecutors believe could be kickback payments, according to the Swiss newspaper Tribune de Geneve.
On Saturday, The Daily Telegraph reported that Felipe had been named as a beneficiary of an offshore fund that controlled the Swiss account with an alleged €65m gift (£59m) from Saudi Arabia given to his father when he was on the throne.
Juan Carlos, 82, became king in November 1975 after the dictatorship of Francisco Franco ended, and reigned until his abdication in June 2014.
Felipe, 52, denied any knowledge of the fund in Sunday’s statement.
Additional reporting by Associated Press
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