Waugh, who turns 39 in June, said at a press conference at the Sydney Cricket Ground (SCG) that now was the right time to go after almost 20 years of playing at the first-class level.
Mark and his twin brother and former Australian captain Steve will make their final first-class appearance for New South Wales (NSW) in a Sheffield Shield match against Queensland at the SCG starting on March 4.
"Pretty much at the start of the year I thought this would be my last season unless a miracle happened and I made 10 centuries and got younger," Waugh quipped at the conference.
"But I'm getting older and I think the time is right to go now. "There's some good younger players in the (NSW) team, so I think it's time for them to step up and myself and Stephen to walk away."
A distinguished international career ended in October 2002 with Waugh amassing 8,029 runs from 128 Tests at an average of 41.82 and 8,500 Limited Overs International runs from 244 matches at an average of 39.35.
Waugh has played 366 first-class matches since making his debut for NSW against Tasmania in Hobart in the 1985-86 season. The stylish right-hander averages 52.07 in first class competition in which he also took 450 catches and 208 wickets at 40.76.
He said his career highlights included his first Test against England in 1990-91, in which he scored 138 at Adelaide Oval, an unbeaten partnership of 464 against Western Australia in Perth the same season when he made his highest score of 229, and NSW's domestic trophy-winning double last summer.
Waugh has struggled to make big scores since the end of his international career last year and he admitted he had sometimes found it hard to get motivated.
"I think on occasions I have, but generally speaking I've enjoyed it and have been pretty motivated," Waugh said. He said he wasn't emotional about his imminent retirement from the game and was happy to go out on his own terms after a modest final season with the Blues.
"It's better than being dropped which might have been in the pipeline unless I made some runs last week in Brisbane, but it's good to go out on your own terms," Waugh said.
"It's not an easy game, I think cricket is a tough game, especially if you're a batsman, there's a fine line between success and failure and even this season, I've been batting pretty well but haven't made many runs.
"There's a lot of outside influences with media pressure and so much cricket, it's not easy to perform consistently day in day out, that's the hardest thing."
Waugh said he was considering offers from media organisations and was also looking at the possibility of going into sports management.
Mark Waugh likely to call it a day