Langer's decision follows the recent retirement announcements of leg-spinner Shane Warne and paceman Glenn McGrath, and the sudden departure of batsman Damien Martyn after the second Adelaide Test.
Langer, who turned 36 last November, will be playing his 105th and final Test against England at the Sydney Cricket Ground from Tuesday.
"As hard and emotional as it is to not wear the baggy green cap again I know in my heart it's the right thing to do," Langer told a press conference on Monday.
"I know that I'm on top of my game. Statistically it hasn't been a great (Ashes) series, but I know how that I am hitting the ball and catching the ball as good as ever.
"They say to go out on your own terms and when you're on top of your game and I feel as if I'm doing that."
He goes into the Sydney Test with 7,650 runs, 20th all-time and the sixth highest Australian run-getter. His 23 Test centuries has him 15th all-time.
Langer has formed part of Australia's most prolific opening partnership with Matthew Hayden, who last week said he was not yet ready to quit cricket.
Langer and Hayden have combined for 5,574 runs at an average of 51.61.
Only the West Indian duo of Gordon Greenidge and Desmond Haynes have made more runs (6,482) than Langer and Hayden, but they played together for 13 years while the Australian duo joined forces only in 2001.
Langer, one of the sport's more passionate players, said cricket was not just a game for him.
"I've had the same baggy green cap for 13 years. Yeah, it is a game of cricket, the greatest game in the world, and I'll be involved in it probably till my last breath," he said.
"It's not just a game for me. It's been the vehicle that I've learned how to handle success, criticism, failure, how to fight back from adversity. I've learned about mateship, leadership, I've learned so many things.
"And hopefully I've forged a strong character and that's all because of the baggy green cap and it's going to be hard to not wear it again after this Test.
"But what it's given me is that I've got no doubt that (when) I'll walk out in five days' time, whatever I take on I'll be able to do it all the better because of the experience... it's sad, but thanks very much."
Langer said he intended to finish the season with his state side Western Australia and play for Somerset in the next English county season.
"There's an amazing challenge at Somerset. They're at the bottom of everything, and I've got a great regard for the coach over there and I'm looking forward to that challenge.
"It would be impossible for me not to play cricket. I love the game and that's why it was so hard to make this decision not to play Test cricket any more, but I love cricket and I'm certainly going to play it for the next eight to 10 months and then we'll see what happens after that."
Another factor in Langer's thinking was that Australia's next Test match after the Ashes series will not be for another 11 months against Sri Lanka in Australia.
Phil Jaques is the favourite to replace Langer and partner Hayden opening the Australian Test batting, although Chris Rogers of Western Australia is another strong contender.
Jaques has scored eight centuries in 37 matches for New South Wales along with two centuries against England on this tour, while Rogers has amassed 13 hundreds in 51 matches.