The veteran second row will walk away from the pro game at the end of the Super 15 campaign.
The decision means the 33-year-old has played his last game for the Wallabies as he has already ruled himself out of a farewell summer Test against Scotland or Wales.
"My last game of professional rugby will be wearing the Western Force jersey. It is an emotional time for me, it's one of those decisions you mull over and think 'are you going too early or too late' and I wasn't really sure of that until recently," said Sharpe, who was won 101 caps for his country.
"I've had a wonderful time playing rugby, have seen some pretty special things over my time and cherished every single moment of it.
"I've been incredibly lucky right through my career to have been involved with some great people and great teams."
Sharpe has been a mainstay of the Wallaby set up since 2002, the year after the Lions last travelled to Australia.
A former national captain, Super Rugby Player of the Year and a member of the Wallaby Team of the Decade, Sharpe featured in three World Cups and was still in the mix for a starting spot this year.
With the Force due to play the Lions in the first Australian game of their latest tour, Sharpe had been in line to take on Britain and Ireland's elite in one form or another.
But today's announcement means the Lions won't feature on his long list of achievements, although a first Super Rugby crown is still high on his agenda as he looks to sign off in style.
"It's not the end right now, I still have some goals I want to achieve this season," added Sharpe.
"I've got one more shot at winning a title and I don't intend on fading away.
"I want to finish with my best Super Rugby season yet, that's the way I want to exit the game."