"I've said all along that I would continue to play as long as I could continue to make a contribution to wins, and I think over the last couple of weeks my performance has not been good enough to do that.
"I've given cricket my all, it's been my life for 20 years, there's not much more I can give."
Ponting, who stood down from the test captaincy last year and retired from one-day cricket in February, has scored nought, four and 16 in his three innings so far in the series against South Africa.
He stressed the decision had not been prompted by the selectors and said it was not hard to miss out on one final Ashes contest next year because he realised he was not good enough to get there.
In Image: Australian cricketer Ricky Ponting's wife Rianna (below-R) holds daughter Emmy, with Rianna's sister Natalie Cantor holding Ponting's second daughter Matisse (at back), as Ponting announces his retirement on the eve of the third cricket Test between South Africa and Australia in Perth on November 29, 2012.