The former captain's tally of 7097 runs from 96 Tests puts him in the fifth place in the list of Pakistan's leading Test scorers.
The 37-year-old played 53 one-Day internationals before quitting the format and does not play T20 cricket for the national team.
"Deciding on when to call it a day is always tough, but, after contemplating deeply, I realised that this is the right time for me to retire from Test cricket," Azhar said in a statement issued by the Pakistan Cricket Board (PCB) on Friday.
"I retire from international cricket as a fulfilled cricketer who ticked most of the goals he had set for himself.
"Not many cricketers go on to lead their countries, and that I was able to captain Pakistan is a matter of great pride for me.
"From being a kid who started as a leg-spinner to becoming a mainstay in the Test batting line-up, I had the loveliest moments of my life that I will cherish forever."
Azhar is the only Pakistan batsman to score a triple-century in a pink-ball Test and his 302 not out in that 2016 match in Dubai against the West Indies remains his highest score in that format.
PCB chairman Ramiz Raja described Azhar as "one of the most committed and loyal servants of Pakistan cricket."
"His grit and determination have been an inspiration for many young cricketers and he is a role model for up and coming cricketers," added Raja.Â
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