The 37-year-old confirmed that the third Test against Sri Lanka at the Sydney Cricket Ground - scheduled for January 3 to January 7 - would be his last, with his international commitments ending after the ensuing one-day series, which ends on January 23.
An official statement from Cricket Australia chief executive James Sutherland said: "Michael Hussey has been a vital contributor to many Australian team wins over his very successful Test cricket career."
He added: "Affectionately known as 'Mr Cricket', he has always been thoroughly committed to meticulous preparation and the highest levels of physical fitness which have in turn delivered consistent performances in all forms of the game.
"An incredibly reliable player and leader within the Australian cricket team, Michael will retire from Test cricket with a record that puts him amongst the very best Australian batsmen of all time.
"Beyond his contributions to team success, he will be remembered for the way he has carried himself on and off the field - and in doing so he has won the respect and admiration of players, officials and fans all around the world.
"In congratulating him on a great Test career, we wish him well and hope to see him stay close to the game after his playing days are over."
He has 6183 runs in 78 Tests to date, with those coming at an average of 51.52 and including 19 centuries.
Hussey has also scored 5442 runs at an average of 48.15 in 185 one-day international matches and was also part of Australia's 2007 World Cup winning side.
Hussey will remain available for selection for the Western Australia Warriors and the Perth Scorchers for the remainder of the 2012-13 season and will make a further announcement about his future on Sunday.