De Grandhomme said a range of factors played a part in his decision, not least his struggles with injury and the increasing competition for places in all three formats.
"I accept I'm not getting any younger and that the training is getting harder, particularly with the injuries," said de Grandhomme.
"I also have a growing family and am trying to understand what my future looks like post-cricket. All of this has been on my mind over the past few weeks.
"I've been fortunate enough to have had the opportunity to play for the Black Caps since debuting in 2012 and I'm proud of my international career – but I feel this is the right time to finish."
De Grandhomme departs the international stage with an impressive record, particularly in the test arena, with his 29 matches realising 1432 runs at 38.70, including centuries against the West Indies and South Africa, and 49 wickets at 32.95 including six for 41 on debut against Pakistan.
The Zimbabwean-born Kiwi featured in 18 wins for the test side and played a key role in the Black Caps' ICC World Test Championship-winning campaign.
De Grandhomme also featured heavily for the ODI side, in 45 outings scoring 742 runs at a strike-rate of 106.15 and taking 30 wickets at 41.00 with the ball, and was one of the stars of the 2019 ICC Cricket World Cup where New Zealand finished as runners-up.
The powerful all-rounder also played in 41 T20Is, scoring 505 runs at a strike-rate of 138.35 and taking 12 wickets at 38.41 (economy rate of 8.61).
De Grandhomme said he'd cherished his time playing for the Black Caps and sharing in such a successful time for New Zealand cricket.
"I've loved being part of this team over the past decade and am grateful for the experiences we've shared together," he said.
"I've made many lasting friendships with teammates, coaching staff and opponents, and will treasure the memories for the rest of my life."
De Grandhomme said he still retained a desire to play domestic cricket in New Zealand when available, and would be discussing that matter with Northern Districts cricket.
Black Caps coach Gary Stead said it was sad to see de Grandhomme depart the international scene, but he understood his reasons.
"Colin's been a hugely influential part of the Black Caps and contributed to some of the team's greatest achievements," he said.
"His immense power with the bat and skills with the ball made him a real match winner and an asset to any side.
"Colin's a great team man and we will certainly miss his character around the dressing room.
"While it's sad to see him go, we appreciate he's at a stage in his career where he's looking to head in a different direction and we respect that.
"We wish him all the best with his future and hope to see him featuring on the New Zealand domestic scene when available."
