The 52-year-old will continue to remain on the Cricket Australia panel for the upcoming tours to England and Zimbabwe as a part of his current deal, but he will not renew his contract when it runs out on August 31.
Announcing the news, Waugh said it was a really tough decision to opt to not continue at his role, adding that he had thoroughly enjoyed his time with the national selection panel.
"I've thoroughly enjoyed my time with the National Selection Panel, and it has been a tough decision to choose not to continue in my role," cricket.com.au quoted Waugh as saying.
"Working alongside my fellow selectors, the coaching staff and players over the past four years has been a privilege, and I'm proud of the achievements of the Australian teams across all formats in this time," he added.
Waugh seems to have resigned from his role as his career as a television commentator takes shape.
The Australian legend recently signed a Fox Sports' commentary team, which along with the free-to-air Channel Seven won the rights to broadcast the Australian summer of cricket in a six-year deal worth almost A$1.2 billion.
Waugh, who appeared in a total of 128 Tests and 244 ODIs for Australia, had joined the four-man national selection panel of Australia in May 2014.
However, Australia's poor performance in T20 internationals prompted a split of the panel, with Waugh taking on a role specialising in the national T20 side in March 2017.
Waugh's resignation comes just few days after Dr Bob Every AO stood down from his position in the Cricket Australia (CA), after serving the board for almost three years.
Earlier this month, Justin Langer also replaced Darren Lehmann, who announced his resignation as head coach of Australia in the aftermath of the massive ball-tampering scandal that sent shock waves through the sporting world.(ANI)