Charlesworth, 62, will relinquish his position after six years in the role during which he led the Kookaburras to World Cup and Commonwealth Games titles, an Olympic bronze medal and four Champions Trophy gold medals.
"I believe it is the right time to re-assign my priorities for my family," Charlesworth said in a statement.
"I am no longer keen on spending up to three months a year away and overseas as one must do as the national coach of the Kookaburras.
Under Charlesworth, Australia returned to the top of the world rankings in 2010, five years after they last held the number one spot.
Charlesworth represented Australia 227 times in a playing career spanning 17 years from his debut in 1972 to his retirement following the 1988 Olympic Games.
He also was the coach of the Australian women's field hockey team from 1993-2000 and a technical advisor to Indian field hockey teams from 2007-08.