Montgomery made the announcement after his 102nd test, in which he came off the bench and kicked two conversions to extend his points haul to 893, sixth highest all-time.
"It has been a privilege to play for my country," 34-year-old Montgomery said at Ellis Park Stadium at the end of South Africa's Tri-Nations campaign.
"I was asked why I would come back after a high of winning the World Cup in France, but for me every time I put on the Bok jersey was a high and I got to do that eight more times this year."
Montgomery became the first South African and ninth player in test history to reach a century of caps two weeks ago, against New Zealand at his Newlands home stadium in Cape Town. Coach Peter de Villiers was criticized by a member of government for picking Montgomery ahead of Conrad Jantjes at fullback, and after the Boks lost 19-0 an off-form Montgomery was the only starter dropped by de Villiers.
"I know that at test level it is time to go," said Montgomery, who said he will be available to play for Western Province this year and the Stormers in next year's Super 14.
After starring at school, age-group teams then WP, Montgomery made his test debut at center against the British Lions in 1997. With his blonde hair and white boots, and ability to puzzle opponents and his own teams, he became one of the most charismatic players in the republic, as often cheered as booed.
He was a key figure in last year's triumphant World Cup run, when he topped the tournament point-scoring list and surpassed Joost van der Westhuizen's Springboks caps record of 89.
Montgomery also played in the 1999 World Cup but left South Africa in 2002 to play in Wales. There, he pushed over a touch judge and received a two-year ban, 18 months of it suspended. It cost him the 2003 World Cup.
Recalled to the national side in 2004, he helped the Boks that year win their second Tri-Nations title, and ultimately their second World Cup.
Montgomery finishes with almost all of the Springboks' points records, including the most in a single test, 35 last year against Namibia, the country of his birth.
"We are truly blessed to have had Monty play out his career for us," said team manager Andy Marinos.
"He has produced some special moments over the years and has been a remarkable player and individual who has been a true credit to his country and the Springboks."
