Smith was part of the Wallaby side that secured a 2-1 series win over Graham Henry's Lions back in 2001 and, until today's decision, there was a real possibility that he could face Britain and Ireland's elite once more in 2013.
One of the most consistent players in the world game over the past decade, Smith won 110 caps for his country after making his debut against France back in 2000.
The ACT Brumbies star captained Australia on seven occasions and was a World Cup Finalist seven years ago.
Smith had been contracted with the Australian Rugby Union until after the 2011 World Cup but, despite being just 29 years of age, he has now asked to be released early from that agreement.
That contract will now come to an end in May of this year, although the Wallabies do not have any fixtures scheduled between now and then.
"The decision to retire from Test Rugby has been a very difficult one. Although I believe that I could play competitive rugby at the highest level and contribute to the Wallabies for many years to come, I know in my heart that this is the right time to step aside," said Smith.
'In recent times I believe that the Wallabies have created the right balance between providing opportunity for the outstanding young talent that is within Australian rugby and also having the knowledge and experience in senior players to bring out their very best. I believe that the fruits of this hard work will be seen in the months and years ahead, most importantly at the 2011 World Cup.
"Throughout these 10 years I have always held a deep respect and honour for the Wallabies jersey and for what it means to be a Wallaby. I have considered it a privilege to wear the gold jersey."
Smith has also announced that the forthcoming Super 14 season will be his last with the Brumbies. He intends to explore opportunities overseas, meaning British or Irish rugby could actually be seeing a lot more of him from this summer onwards.
"I would like the opportunity to experience a different environment and culture together as a family unit whilst still playing competitive rugby I personally feel that I owe this opportunity to my family," added Smith.
"I believe that now is the time for me to give back to my family, to be able to spend more quality time with my wife and young children.
"It has become increasingly difficult for me to spend large periods of time away from home and my family and this is something that I would like to change."