The 39-year-old made his test debut at the same ground in the final match of the 2010-11 Ashes series and has since scored 6,206 runs at an average of 43.39 in 87 matches, including 16 centuries.
"I'm here to announce today that I'll be retiring from all international cricket after the SCG test match," Khawaja told reporters at the ground, where the fifth test begins on Sunday.
"Cricket has given me far more than I ever imagined. It's given me memories I'll carry forever, friendships that go well beyond the game, and lessons that shaped who I am off the field."
The Pakistan-born batter injured his back in the Ashes opener in Perth and missed the second test before initially being dropped from the team for the third in Adelaide.
He was recalled at the eleventh hour after Steve Smith suffered a bout of vertigo and, batting at number four rather than opening, scored 82 and 40 as Australia won by 82 runs to clinch the series and retain the urn.