Jason Kenny has been selected to ride the individual sprint for Team GB at the London 2012 track cycling ahead of Olympic champion Sir Chris Hoy.
The decision means 36-year-old Hoy will only be able to defend two of the three titles he won in Beijing in 2008.
Both men have been selected in the team sprint, along with Philip Hindes, while Hoy will ride in the keirin.
"We found out a few weeks ago, it was not out of the blue now. They made the right call," said Hoy.
"It is not about individual ambition it's about the team getting the most number of gold medals.
"Therefore you could say you are spreading yourself a bit thin by taking part in three events but that is not why they have made the decision. They have picked the best sprinter."
"I don't want to jinx him or say too much too soon but the rest of the world had better watch out as he is going exceptionally well."
British Cycling performance director Dave Brailsford added: "Both Chris and Jason are on great form and that made it a difficult choice but we have decided to select Jason to contest the sprint and Chris will concentrate on the keirin.
"We believe this gives us the strongest team possible going into the Games."
The fight for Britain's men's sprint berth had been fiercely contested between the pair, with results on the track swinging in both directions over the last four years, but 24-year-old Kenny has been handed the spot after defeating Hoy at this year's World Championships.
Kenny beat the Scot in the semi-finals in Melbourne in April but missed out on gold, losing in the final to France's Gregory Bauge, the favourite for sprint gold in London.
"I was not confident at all [of being selected]. Training had been going well but training had been going well for the rest of the team," said Bolton's Kenny.
"To be honest after the World Championships we had done our bit and it was then in the hands of the selectors. We needed to knuckle down and keep training well.
"Now it is about going through the motions and making sure we are in the best possible shape."
Hoy, whose last world sprint title came in 2008, will instead concentrate on the keirin, an event in which he is the reigning world and Olympic champion.
"It means I have got the chance to have a proper recovery between the team sprint and the keirin which is a bit of a luxury really," he said.
"It means I can give it everything in the team sprint and then get that out the way and prepare for the keirin."
Full Team GB track cycling line-up:
Men's team sprint: Philip Hindes, Sir Chris Hoy, Jason Kenny, (reserve - Ross Edgar)
Women's team sprint: Victoria Pendleton, Jess Varnish, (reserve - Becky James)
Men's team pursuit: Steven Burke, Ed Clancy, Pete Kennaugh, Andy Tennant, Geraint Thomas
Women's team pursuit: Wendy Houvenaghel, Dani King, Joanna Rowsell, Laura Trott
Men's sprint: Jason Kenny
Women's sprint: Victoria Pendleton
Men's keirin: Sir Chris Hoy
Women's keirin: Victoria Pendleton
Men's omnium: Ed Clancy
Women's omnium: Laura Trott