The Black Caps leave for a three-Test series in England next month.
Cairns said he felt it was fitting that he should finish his career at Trent Bridge, where he first played County cricket for Nottinghamshire in 1988.
"I have some great memories from Trent Bridge and I feel it is the appropriate time and place to finish my test career," he said.
Cairns said he wanted to spend more time with his family.
"I have two young boys and a wonderfully supportive partner who I would like to be able to spend more time with."
New Zealand Cricket chief executive Martin Snedden said Cairns had his support in making the decision.
"Chris' achievements in Test cricket cannot be underestimated," Snedden said.
"In the recent Test series against South Africa he became one of only six cricketers to ever reach 3000 Test runs and 200 Test wickets.
"He was the second fastest cricketer to achieve this milestone next to England's Ian Botham.
"This achievement is even greater when you consider his career has on several occasions been adversely affected by injury," Snedden said.
Cairns' last Test will be played at Trent Bridge starting on June 10.