Terry, 31, says the decision is in response to the Football Association's disciplinary charge over alleged comments to Anton Ferdinand. .
He said his FA personal hearing on Monday makes his position "untenable".
"I feel the FA, in pursuing charges against me where I have already been cleared in a court of law, have made my position with the national team untenable," he said.
It is a massive development ahead of what was seen by many as a defining case in the row over racisim in football.