England head coach Brian Ashton names his 32-man squad for the RBS 6 Nations on Wednesday and had stated Dallaglio, 35, remained under consideration for international duty.
But Ashton, who was heavily criticised in Dallaglio's recent autobiography, is expected to favour younger players as he begins rebuilding the team.
In a pre-emptive strike, Dallaglio has brought down the curtain on a celebrated Test career that has spanned 12 years and 85 caps - the last of which was the World Cup final defeat by South Africa last year.
"I have enjoyed a marvellous run and been the proudest of Englishmen every time I wore my country's jersey," Dallaglio told The Sun.
"However, I believe my international career has run its course and it's time for me to step aside and make room for the young guns kicking down the door.
"What I do want to emphasise is that my decision has nothing whatsoever to do with England head coach Brian Ashton and my post-World Cup observations concerning his preparation early in the tournament.
"Mike Catt and Jason Robinson have retired from the Test arena and I'm doing the same.
"But England is blessed with a number of experienced guys who wish to continue being considered for selection.
"England can also turn to former skippers Martin Corry, Phil Vickery and Jonny Wilkinson to provide the team with a spine of experience.
"For me, the journey began and ended with South Africa. I made my England debut off the bench against the Boks at Twickenham in 1995 which began a fascinating journey for me.
"It has been a marvellous experience and one that I cannot better."
Dallaglio has been in superb form since returning from the World Cup and Wasps hoped he would accept a contract extension until 2009.
But the number eight is determined to bring down the curtain on his 17-year stint with the European champions - his one and only club.
"I'm probably playing my best rugby in two years but there will not be another new season for me at Wasps," he said.
"They are my only club and that's how it will remain when my boots hit the bin at the end of the season.
"Long-term, I fancy coaching but it would have to be on the right terms and with the right set-up. Being honest, it's far too early for me to go beyond that."