"This Test will be my last," he said at a hastily-called press conference, adding that he will continue to play for Tasmania in the domestic competition this summer.
Ponting, who turns 38 next month, has failed in three innings against the Proteas during draws in Brisbane and Adelaide and pressure has been building on the veteran ahead of Friday's series decider in Perth.
Perth will be a fitting conclusion to a remarkable career.
It is where he debuted against Sri Lanka in 1995 and by playing Friday he will equal Steve Waugh's mark of 168 Test matches -- the most in the history of Australian cricket.
After being made Australian captain in 2004, the right-hander went onto become one of the country's greatest cricketers.
The Tasmanian, who has 13,366 Test runs to his name, including 41 centuries with only Indian legend Sachin Tendulkar scoring more, said he knew it was time to call it a day.
"Over the last couple of weeks my level of performance hasn't been good enough," said Ponting, who had already been dumped from the one-day and Twenty20 international squads.
"My passion and love for the game hasn't changed but at the end of the day (the decision) was based on my results.
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