Farhat, 33, made the decision after meeting the officials of the Pakistan Cricket Board yesterday and got a No-Objection Certificate to participate in the MCL.
The left-handed batsman, who last played for the national team in 2013, joins a long list of Pakistani cricketers who have been forced by the the PCB to announce their international retirements in order to get the lucrative contracts in the Masters League.
According to the PCB's policy, the players, who sign contracts for the MCL, were told to first sign a letter to officially end their international careers with the decision being irrevocable.
The PCB, however, clarified that the players who go for the MCL can continue to play in domestic cricket.
Despite having the experience of playing 181 first-class matches and scoring 12,669 runs, Farhat was left out in the drafts for the inaugural Pakistan Super League (PSL), which is set to be held in February.
Farhat will join former team-mates Abdul Razzaq, Saleem Elahi, Mohammad Yousuf, Saqlain Mushtaq, Rana Naved, Taufiq Umar, Yasir Hameed, Mushtaq Ahmed, Azhar Mehmood, Hasan Raza, Humayun Farhat and Mohammad Khalil in the league.