The 38-year-old, who quit first-class cricket in 2012, had captained Perth Scorchers to KFC Twenty20 Big Bash League title earlier this year, making the team eligible to play in the CLT20, scheduled from September 8 to 30 in India.
Katich played 118 T20 games and scored 2483 runs at an average of 30.28 and a strike-rate of 126.61. Of these, only three appearances came for Australia.
"It's always difficult when it comes to making these sorts of decisions," Katich said.
"I have a young family, I've had a great run and for my last game at the WACA, my home ground, to be a win in a successful (BBL) campaign; it's the stuff you dream of. I'll finish on a high and that was a big part of the reason I decided to pull up stumps," he added.
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"My decision certainly wasn't for any other reason other than I felt I'd had my time and now it's the boys' turn. The past three years have been outstanding at the Scorchers; we've been really consistent and getting to three finals, then getting over the line last year was very rewarding for everyone involved," he said.
"Justin, the coaching and support staff and all the players made the end of my playing years very memorable and very special. That's something I'll always be grateful for; to have finished at my home ground and in front of family and friends, with a great bunch of lads."