The surprise announcement comes days after England surrendered the coveted urn in the third Test in Perth to fall 3-0 behind in the five-Test series, and continues a tumultuous campaign for the visitors both and on off the field.
The 34-year-old Northampton man said his body was no longer up to the rigour of long-form cricket and that it would be selfish for him to stay in a team that needed to rebuild.
"It's quite simple, when I came out on this trip, I half expected it to be my last tour for England," he told reporters at the Melbourne Cricket Ground where the fourth Test starts on Thursday.
"I was desperately hoping to win the Ashes out here again, like we did in 2010-11 but with the Ashes gone now, with those three Test matches, personally I think to stay on and selfishly play just to experience another Boxing Day Test, Sydney Test match would be wrong.
"It would be wrong for the team, it would be wrong for me as well.
"It's time for someone else to strap themselves in and enjoy the ride like I have done. It's time for England to rebuild and refocus on winning back these big series and me hanging around with the decision already made in my head wouldn't be right."
Swann had long been Australia's Ashes tormentor, playing a key role in England's run of three successive series wins against their arch-rivals, but has been a shadow of the guileful off-spinner that topped the bowling table with 26 wickets in the northern Ashes, which England won 3-0.
He had managed only seven wickets for the current series at 80 runs apiece and was brutally punished by Australia's batsmen in their second innings at the WACA.
"My body doesn't like playing long forms of cricket," Swann said.
"My arm doesn't cope very well with bowling 30-40 overs in the first innings and then repeating it in the second innings a day later any more.
"So I could feel my performances tapering off to the back end of games and I wasn't happy with that.
"I'm not willing to just hang on and just get by being a bit-part player. I want to be a guy who wins matches for England and I don't feel like I was doing that in the second innings any more."
Swann, who has come back from two elbow surgeries in his career, retires sixth in England's all-time Test wicket-takers with 255 wickets from his 60 matches.
Since taking two wickets in the first over of his 2008 Test debut against India in Chennai, Swann quickly established himself as England's premier spinner and was one of the principal architects of the team's rise to the pinnacle of Test cricket in 2011 under then-captain Andrew Strauss.
Although a formidable competitor, Swann's love of wise-cracks and banter offered a refreshing change from the usual parade of po-faced players in elite cricket.
His antics in his 2010-11 Ashes video diary proved a hit, as was his leading his team mates on a victory "sprinkler" dance after they retained the urn Down Under, for the first time in a quarter of a century, by thrashing Australia at the Melbourne Cricket Ground.
Swann's off-the-cuff assessments sometimes rubbed the wrong way, and he was moved to apologise last week after landing in controversy for comparing the Perth loss to "rape" on his brother's Facebook page.
The episode had no bearing on his decision, however.
Despite his poor form, Swann's departure robs England of one of their finest spinners and most seasoned campaigners. Left-arm spinner Monty Panesar is likely to come back into the side for the Melbourne Test and the fifth and final match in Sydney.
Like Swann, Panesar was also flayed by Australia's batsmen in the second Test in Adelaide, finishing with 2-198 for the match.
Swann said he hoped the uncapped Scott Borthwick, the 23-year-old Durham legspinner, might soon be given a chance.
"I think Monty's going to come in and do a great job in this game coming up this week and whoever ends up taking the role fulltime will do a great job as well," Swann said.
"Personally I hope little Scotty Borthwick gets the chance before long. He's a legspinner, he's got a bit of X-factor as well."