"In the best interest of the game, Inzamam should retire immediately and (vice captain) Younis Khan should be made the captain," said Sarfraz, acclaimed as the pioneer of reverse swing.
"Inzamam is scared of short pitched deliveries, he can't even negotiate short balls by a spinner."
England beat Pakistan by 167 runs on the fifth and final day of the third Test at Headingley on Tuesday. The victory saw England take an unbeatable 2-0 lead in the four-Test encounter. The first Test was drawn.
Burly Inzamam became a figure of fun after his dismissal in the first innings, when he fell into his own stumps attempting a sweep shot against left-arm spinner Monty Panesar.
Pakistan's batting in the second innings crumbled for 155 runs while chasing a target of 323 in the possible 90 overs on the last day.
Sarfraz said Wednesday the poor team selection and a lack of team spirit were to blame for Pakistan's performance.
He criticised the picking of both flamboyant all-rounder Shahid Afridi in the first two Tests and of paceman Mohammad Sami, who was chosen after Shoaib Akhtar, Mohammad Asif and Rana Naved were ruled out by injuries.
"How long they are going to try Sami in international matches? He should make way for some other young fast bowler," said Sarfraz, who took 177 wickets in 55 Tests for Pakistan.
The former pacer praised the performance of English bowlers in the absence of their star Andrew Flintoff.
Sarfraz said he had been asked by the sports ministry to prepare a report on the humiliating loss in England and added that he might travel to England to witness the last Test match starting August 17 at the Oval.
It was Pakistan's first series loss since they toured Australia in 2004/5.