Theresa May has said the UK "cannot possibly" remain within the European single market, as staying in it would mean "not leaving the EU at all".
But the prime minister promised to push for the "freest possible trade" with European countries and to sign new deals with others around the world.
She also announced Parliament would get to vote on the final deal agreed between the UK and the EU.
But Labour warned of "enormous dangers" in the prime minister's plans.
Mrs May used her much-anticipated speech to announce the UK's priorities for Brexit negotiations, including:
Maintaining the common travel area between the UK and Irish Republic
Tariff-free trade with the EU
A customs agreement with the EU
New trade agreements with countries outside the EU
Continued "practical" sharing of intelligence and policing information
"Control" of immigration rights for EU citizens in the UK and UK citizens in the EU
A "phased approach"
Mrs May said there would not be a "blow-by-blow" account of negotiations, set to get under way after Article 50 of the Lisbon Treaty is invoked by the end of March.
It was not her intention to "undermine" the EU or the single market, she added, but she warned against a "punitive" reaction to Brexit, as it would bring "calamitous self-harm for the countries of Europe and it would not be the act of a friend".
She added: "I am equally clear that no deal for Britain is better than a bad deal for Britain."
She said: "This agreement should allow for the freest possible trade in goods and services between Britain and the EU's member states.
"It should give British companies the maximum possible freedom to trade with and operate within European markets and let European businesses do the same in Britain. But I want to be clear: what I am proposing cannot mean membership of the single market."
Mrs May added: "It would, to all intents and purposes, mean not leaving the EU at all. That is why both sides in the referendum campaign made it clear that a vote to leave the EU would be a vote to leave the single market."
So, yeah. Been nice knowing you, everyone. I'll try and wrap up all my ongoing fanfiction projects before I starve to death.