Clarke announced, after England reclaimed the urn with a crushing innings and 78-run win at Trent Bridge, that the fifth test at The Oval will be his last.
The 34-year-old had been under increasing pressure throughout the five-test series due to his batting slump.
It wasn't until Clarke mulled a dismissal of 13, which dragged his series average down to 16.71, that he decided it was time to hang up the boots.
"Selectors did not speak to me at all about being dropped or standing down or retiring," Clarke said.
"I made the decision late last night with my beautiful wife and spoke to my family.
"This morning I had a conversation with Darren Lehmann and Rod Marsh and told them what I was going to do.
"They were both extremely respectful and thankful for what I've given Australian cricket.
"I don't feel sad. I'm more disappointed or sad with the way we played through this series and the way I played as captain."
Clarke will lead the side in London before handing the reins over to Steve Smith.
Smith was already going to skipper the one-day team in the upcoming series against England, but will now captain the test side on a tour of Bangladesh in October.
The 26-year-old became Australia's 45th test captain last summer, when Clarke underwent hamstring surgery and missed three games against India.
"I think Smithy is ready," Clarke said.
"Smithy had the opportunity through the Australian summer and showed that he's going to make a good captain.
"I've certainly got faith in him. I believe in him and I believe in the Australian team.
"We have a lot of talent whether it be in this change room or in the Australian system coming through."
In Clarke's past 30 test innings he has reached 25 just six times and scored two hundreds.
The right-hander noted his performances in the ongoing showpiece series "had not been acceptable".
"As a captain, I certainly haven't led from the front," he said.
"It's hard to walk away now but I think it's the right time.
"You build yourself up for the big series, I've tried my best but now it's time for the next captain to try and get the team ready for the next Ashes."
Alastair Cook called on the crowd to pay tribute to his vanquished counterpart during the post-match ceremony.
"You should be remembered as a great captain and a fantastic cricketer," Cook said.
The Nottingham nightmare is Clarke's 13th away defeat as test captain.
No Australia skipper has lost as many away tests.
Yet there were plenty of highlights in Clarke's career, including 28 test tons.
"I loved winning as much as anyone so 2007 was a fantastic year," he said.
"We won the World Cup, we won the Ashes 5-0.
"Obviously winning the World Cup in Australia recently."
Clarke will captain Melbourne Stars in the upcoming Big Bash League season and is likely to join close friend Shane Warne in the Channel Nine commentary box.
Final chapter
Ricky Ponting suggested the Ashes could be the final chapter in many test careers. Who was he talking about?
Going?
*Adam Voges - failed to fire in the Ashes. An unbeaten half-century at Trent Bridge will keep him in selectors' thoughts when they name a squad for Bangladesh
*Mitchell Johnson - one of Australia's best in England. Recently hinted he may retire if he equals Dennis Lillee's mark of 355 test wickets, but may exit earlier
*Shaun Marsh - failed in his only chance to shine on tour. Impressed in tour games and may be retained for the tour of Bangladesh
*Shane Watson - replaced by Mitch Marsh at Lord's. Likely to play in the upcoming one-day series, but may not play another test if Marsh stays fit
Going
*Chris Rogers - Australia's leading run-scorer in the series. Selectors may ask him to reconsider retirement, but 37-year-old is likely to resist the carrot of a Bangladesh tour
*Brad Haddin - has been surpassed by Peter Nevill. At age 37 he won't play for Australia again unless selectors decide to give him a testimonial at The Oval
*Peter Siddle - was overlooked throughout the series. Regularly impressed in the nets but couldn't get a look in, selectors expected to stick with the younger generation of quicks
*Fawad Ahmed - was overlooked throughout the series. Selectors liked the idea of a legspinner tormenting England, but he was never able to seriously press for a berth
Gone
*Michael Clarke - will retire after the fifth test. On current form he no longer warranted a spot in the XI, but leaves an almighty hole as one of the side's best players of spin
*Ryan Harris - retired pre-series. The lion-hearted paceman was sorely missed throughout the series, having been Australia's leading wicket-taker in the 2013 Ashes.
