The midfielder, who turns 34 in October, confirmed his decision on social media just over a month after leading his country at Euro 2024, where hosts Germany were eliminated by eventual champions Spain in the quarter-finals.
Gundogan, born in Gelsenkirchen to Turkish parents, represented Germany from Under-18 to Under-21 level before making his senior international appearance in a European Championship qualifier against Belgium in October 2011.
He went on to earn a total of 82 caps, including 19 as captain, and he contributed with 19 goals and nine assists, netting his final goal for his country in a 2-0 group-stage win over Hungary at Euro 2024.
Gundogan missed Germany's triumphant 2014 World Cup campaign due to a back injury, before suffering two disappointing group-stage exits at the 2018 and 2022 World Cups.
Nevertheless, Gundogan is held in high regard by Die Mannschaft and has vowed to "definitely continue" supporting the national team as a fan.
A statement posted on Instagram from Gundogan read: "After a few weeks of consideration, I have come to the conclusion that it is time to end my national team career," he wrote.
"I look back with great pride on 82 international matches for my home country - a number I could never have dreamed of when I made my debut for the senior national team in 2011.
"My highlight was definitely the huge honour of being able to lead the team as captain at our home European Championship last summer! After all these years, we finally managed to make the nation proud again - I'm very happy that I was able to play a part in that.
"But even before the tournament, I felt a certain tiredness in my body and also in my head, which made me think. And the number of games at club and national level is not coming down.
"I will definitely continue to be a fan of this national team and I really hope that we can continue the upward trend together - and then there is nothing to stop us from being one of the prime contenders for the title at the 2026 World Cup. We have a fantastic coach, a really strong squad and a great team spirit."
Nagelsmann: 'The door is open if Gundogan changes his mind'
Germany head coach Julian Nagelsmann has labelled Gundogan an "amazing captain" and has stated that the door is open for the midfielder if he wishes to change his mind.
"I'm incredibly proud that Ilkay was our captain, he was fantastic for us at the last Euros," Nagelsmann told dfb.de. "I was always fascinated and impressed by his intelligence, his sense of security on the ball and his clever and accurate passing. We expect our players to play passes with intention, which Ilkay always did.
"He rarely sought the spotlight for himself, but instead often allowed his teammates to shine. We will miss his skilful ways as well as his vision.
"He was an important point of contact for myself and the team, and it was very helpful to be able to talk things through with him, even outside of football. He's an intelligent, thoughtful and very warm-hearted person.
"Ilkay was an amazing captain, and I would have liked to have been able to continue working with him. The door is never fully shut for anyone in the national team, but we respect his decision and wish him all the best for the future, both on and off the pitch."
Germany sporting director Rudi Voller added: "Ilkay is a fantastic footballer, and he was able to impress all of Germany with his unique skills, intelligence, movement and passing at our home EUROs.
"He earned the respect of his teammates, who could look to him as an example of his professionalism and his mentality.
"His team spirit and his love for the game made Ilkay a model captain both on and off the pitch, as well as being an important point of contact for Julian and myself. We will miss him for exactly these reasons."
Gundogan's announcement of his retirement comes just over a month after Bayern Munich's Thomas Muller confirmed his decision to step back from international duty at the age of 34, after scoring 45 goals in 131 international caps.
The Barcelona midfielder's announcement also comes at a time when speculation over his club future has surfaced, amid reports that he has agreed to leave the La Liga giants this summer, with his former club Manchester City allegedly interested in re-signing him.