Carter crossed the Lions line twice in the final provincial fixture before the first Test as Britain and Ireland's elite came through a tough challenge from Michael Cheika's men at the Allianz Stadium.
The 30-year-old midfielder played 84 times for the Tahs during a decade of service and lies 18th on the list of all-time appearance makers for the New South Wales side.
Carter spent his entire career with the Waratahs and captained the light blues to an away win over the Force this season but won't be carrying on into 2014.
He signed a one-year contract extension last season but will now turn his attentions to the Shute Shield with Sydney University before taking a short-term sabbatical while he assesses potential opportunities overseas.
"I'm not retiring, I'm just going to have a break. I will play out the year at Sydney University and intend to play somewhere else next year," Carter told Paul Cook of Rugby News prior to the announcement from the Waratahs today.
"I've had 10 pre-seasons in a row and I think the body could do with a bit of a break. I'm not doing a Richie McCaw - I don't think I've earned it that much! - but it'll be good to recharge the batteries and spend a bit of time at home before deciding what's next.
"I'm very sad to be leaving the Waratahs, it's been a huge part of my life and it's been an honour to wear the shirt. I thought I'd be lucky to play one game let alone over 80 so I've had a fantastic time and I feel very honoured to have been a part of this for so long."
Fittingly, Carter's final cap for the Tahs was in front of a full house against the Lions on June 15.
He admits it was a special moment and, with those two tries next to his name in the record books, far from a bad way to bow out.
"There were a few tears at the end of that game, it just made me realise what this place means to me," added Carter, who is keen to cross over into European rugby next season or the season after, in his exclusive interview.
"It's been nine years of my life and that was a pretty special night, you can look back on something like that for the rest of your life. If that's the last thing I ever contribute to this place, then it's not bad!
"I still feel I've got some of my best footy ahead of me and a bit of time away from the game and a chance to freshen up will be good. Japan doesn't really grab me and I'd like a shot at the Heineken Cup."