The 34-year-old Melbourne hooker, who led the Kangaroos to a successful defence of their World Cup title in December, says he made the decision for family reasons.
"The responsibility of playing for your club, state and country all in one season eventually proved a balance too difficult to strike," Smith said.
"It was getting more difficult to be away from my wife and children.
"My eldest one now being 10 years of age, there are things with my family and school that I am now missing out on.
"That is a big commitment and a sacrifice for myself to make but also a bigger sacrifice for my family.
"When you get your children asking why you can't be in attendance at some of your events, that is not a great feeling."
Australia coach Mal Meninga said: "Cameron is a wonderful captain, both in the way he plays on the field as well as the way he carries himself off the field.
"He has been an outstanding representative of the Kangaroos' values in the green and gold. He is highly competitive and highly respected but above all that he is a great person.
"Obviously he will be missed but what he has done over 56 matches for the Kangaroos as well as during his time with the Maroons will leave an important legacy for future players and future leaders."
NRL chief executive Todd Greenberg said: "Cameron will retire as one of the greatest ever representatives of both the Kangaroos as well as the Maroons.
"He will also be revered as one of the greatest captains.
"What he has achieved over such a long period of time for both Australia and for Queensland is simply phenomenal."
Meanwhile, Fiji will replace Lebanon in the 2018 Pacific Test Invitational at Campbelltown Stadium, Sydney, on Saturday, June 23.
The Cedars withdrew from the tournament for political reasons so Fiji, who have resolved their own World Cup pay dispute, will line up alongside Tonga, Samoa and Papua New Guinea.
Related rugby league links
