The 28-year-old's deal with the Seasiders expired at the end of last season and is now a free agent.
Having been one of Blackpool's stand-out performers in the club's unsuccessful battle against relegation, Vaughan is likely to have plenty of offers with Sunderland and West Bromwich already interested.
No deal: Vaughan has declined the offer Blackpool tabled
'It was a very good offer and it was a tough decision, but I just want to stay in the Premier League and test myself at the highest level,' he said.
'It was unfortunate that we couldn't quite stay up last season and that was a big disappointment.
'My three years at Blackpool have been great and if it wasn't for Blackpool I may never have played in the Premier League, so I have a lot to thank the club and the manager (Ian Holloway) for.
'He has changed things around and I'll always look back on my time with fond memories.'
In a spin: DJ is another heading for the exit
He added: 'It's a tough decision to move because my family are settled in the area, but hopefully things will work out well wherever we end up.'
The exodus from Bloomfield Road is unlikely to end with Vaughan as Charlie Adam, wanted by Liverpool, Tottenham and Manchester United in January, is destined to leave while striker DJ Campbell - who reportedly has a ?1.25million release clause which can be activated as a result of the club's relegation - believes his future lies elsewhere.
'I had a conversation with the manager and told him how I felt. He understands,' the 13-goal forward told the Blackpool Gazette.
'He knows that at my age (29), with what I achieved during the season, he can't really stand in my way.
'It's not about money - I'm a human being with ambitions.
'Blackpool's been great but I think people realise that if I want to take my career on and play for England I have to be in the Premier League.' Blackpool boss Holloway moves for winger once dubbed the next GiggsDJ Campbell: England's players do not know the real meaning of being tiredAll the latest Blackpool news, features and opinion
Explore more:People: David Vaughan, Ian Holloway, Charlie Adam Places: Liverpool, United Kingdom