"I feel now is the best time to say goodbye," the 34-year-old said in a statement ahead of the fifth day's play at Perth's WACA Ground.
"It's been an incredible ride. But the ride has to come to an end at some point and to do so here at the WACA is very special."
He follows Michael Clarke, Brad Haddin, Ryan Harris, Chris Rogers and Shane Watson into retirement, who all quit after the recent Ashes series against England.
On his adopted home ground which has been the scene of some of his most lethal spells during a 73-Test career, he returned dismal figures of 1-157 in the first innings against New Zealand.
His sole wicket moved the left-armer past Brett Lee and into fourth place on the all-time Test wickets list for Australia, with 311. He sits behind Dennis Lillee (355), Glenn McGrath (563) and Shane Warne (708).
"I've given the decision a lot of thought," said Johnson, who emotionally told his teammates of his decision at the conclusion of play on the fourth day.
After making his first class debut with Queensland in 2001, Johnson got his start in the Test team in 2007. He later moved to Western Australia.
His best haul was 8-61 against South Africa, at the WACA Ground, in 2008.
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