Chappell, whose younger brother Greg could be sacked as India's coach next week following the team's first round exit from the World Cup, said Tendulkar was past his prime and must retire.
"At the moment he looks like a player trying to eke out a career; build on a glittering array of statistics," the senior Chappell wrote in the Mumbai-based Mid-Day newspaper.
"If he really is playing for that reason and not to help win as many matches as he can for India then he is wasting his time and should retire immediately."
Tendulkar, one-day cricket's most successful batsman, managed only 64 runs in three World Cup matches, falling for seven against Bangladesh and clean bowled for zero against Sri Lanka.
India's stunning loss to Bangladesh and the subsequent defeat to Sri Lanka saw the 1983 champions and 2003 finalists crash out of the tournament in their worst World Cup performance since 1979.
India's cricket chiefs will meet in Mumbai on April 6 and 7 to discuss the World Cup debacle and decide if coach Greg Chappell's two-year tenure is to be extended.
Ian Chappell said Tendulkar, who turns 34 next month, must decide soon if he wanted to continue or end a brilliant 18-year career that has seen him score a record 35 Test and 41 one-day centuries.
He compared the Indian to another ageing veteran, 37-year-old West Indian captain Brian Lara, who is Test cricket's leading batsman with 11,953 runs from 131 matches.
"When you think that for a decade Lara and Tendulkar went head to head in a wonderful battle of stroke play to establish who was the best batsman in the world, they are now worlds apart in effectiveness," Chappell wrote.
"The amazing thing about Lara's brilliant career is the fact that he hasn't changed his style at all over 17 years.
"This is a credit to his technique and mental strength, as the ageing process generally makes a player more progressively conservative.
"Tendulkar hasn't worn as well; his last three or four years have been a shadow of his former self."
Chappell said a string of tennis elbow, back and shoulder injuries in recent years had taken a toll on Tendulkar's batting.
"The Indian has suffered a lot of injuries where his play has deteriorated and there is nothing that melts your mental approach quicker than physical handicaps," he wrote.
"For whatever reason, Tendulkar hasn't been able to maintain his extremely high standards for the last few years and unless he can find a way to recapture this mental approach he's not doing his team or himself any favours.
"If Tendulkar had found an honest mirror three years ago and asked the question: 'Mirror, mirror on the wall, who is the best batsman of all?'
"It would've answered: 'Brian Charles Lara.'
"If he asked that same mirror right now: 'Mirror, mirror on the wall, should I retire?'
"The answer would be: 'Yes.'"