The 38-year-old called time on his international career in December but has continued to feature in a variety of domestic competitions and is currently playing for Surrey.
After the end of that deal he will compete in the Champions League with his Indian Premier League franchise the Mumbai Indians before retiring for good.
There have been suggestions that Ponting could be persuaded to don the Baggy Green again this summer for one final Ashes assignment, especially if Michael Clarke's back injury affects his participation in the series, but today's news appears to make that possibility even more remote than it already was.
Ponting told the Daily Mail website: "While I'm enjoying my cricket as much as ever, it just feels like the right time to finish playing.
"My body and mind are in great shape and I know I'm going to really enjoy these last few months before the next stage of life begins."
Ponting's decision is a blow to Cricket Australia, who had offered him a 'marketing contract' earlier this month and hoped he would play a major part in their lucrative Big Bash League.
But Ponting is defined by his achievements on the world stage.
He played in, and later captained, Australia sides who were the envy of international cricket and his career total 13,378 Test runs places him second on the all-time list behind only Sachin Tendulkar, amassing 41 Test centuries in 168 caps.
As skipper, he led his country in 77 Tests and won a remarkable 48 - though English fans will not need reminding that he also captained his country in three Ashes defeats.
He also appeared in 375 one-day internationals, scoring 30 hundreds.
Ponting, who plays against Yorkshire at Headingley tomorrow, bows out of the game with a wealth of opportunities in front of him, including charity work, media prospects and some much needed leisure time.
"I'm so grateful for the opportunities that the game of cricket has given to me," he said.
"I'll be able to spend more time with family and friends, play a lot more golf and see more of North Melbourne footy games.
"I'm considering a couple of options in the cricket media and I'm very fortunate to have a wonderful group of commercial partners that I will be continuing to work with.
"(Wife) Rianna and I will continue to build the work of the Ponting Foundation and, with more time on my hands, I'm intending on spending more time with children with cancer and their families."
As for a potential future in coaching, Ponting added: "I got a taste for the off-field demands of coaching, mentoring and leadership at Mumbai. I'd like to do more of this in the future."