Taylor, 34, quit international cricket in February after leading Australia to its fifth consecutive Ashes victory over England. He played out the rest of the Sheffield Shield season with New South Wales but has opted against returning for another season.
"In deciding not to play for New South Wales from next summer I am entirely satisfied that I have made the correct decision, however emotionally difficult it has been, to bring to an end what has been a thoroughly enjoyable and satisfying career," Taylor said in a resignation letter.
Taylor, whose Test career was crowned with a magnificent 334 not out against Pakistan last year, wants to spend more time with his family. He is expected to become a regular commentator on the game and has also found work promoting ticket sales for the Sydney Olympics.
In 100 first-class matches for New South Wales, Taylor scored 6,997 runs, including 17 centuries. He also took a record 132 catches.
The Sussex captain, Chris Adams, is likely to see out the remainder of his career with the county after signing a new six-year contract yesterday worth almost pounds 500,000.
The 28-year-old has so far failed to earn a run in England colours despite his weight of runs in the domestic game.
"This contract shows that my future is at Sussex," Adams said, "and by signing for this length of time I am showing my commitment to the club."
Sir Clyde Walcott, the first non-Englishman to become chairman of the International Cricket Council, says video replays at grounds should be scrapped to protect umpires.
Two crowd riots in the Caribbean, caused by controversial decisions in the West Indies v Australia limited-overs series, may support his argument.
Walcott, a former West Indies Test batsman and wicketkeeper who was manager of the World Cup-winning West Indies teams of 1975 and 1979, said umpires were already under too much scrutiny.
"You shouldn't place the umpires in a position to be embarrassed," Walcott said. "They're only human. I'd hate to think the game will ever be controlled fully by technology."Reuse content