The 33-year-old left-back won 107 caps and played at three World Cups.
Southampton left-back Luke Shaw, 18, will be included when England manager Roy Hodgson names his 23-man squad, plus seven standby players, on Monday.
"I got the call from Roy and agree the England team should be about the young players. I think it best I retire from the England team now," said Cole.
We have a great manager and team and I wish them only success. I will be supporting them like a true fan. Thanks to everyone for everything," Cole added on Twitter.
"Leighton Baines and Shaw are great players, proved this season, and are the future of this country, it was a pleasure to get 107 caps.
"Like me or not, trust me it's hurt me to stop playing for my country #proud and #honoured."
Hodgson said leaving Cole out of his squad for Brazil was "one of the hardest decisions of my career".
"He's been an incredible competitor for England," added Hodgson. "To amass over a century of caps is a truly staggering achievement and he deserves enormous credit for the desire and brilliance which has shone through over the years he has represented his country.
"There are few players who can be considered among the very best in the world, but Ashley in his prime was the best left-back without question.
"In two years working with him he has shown nothing but relentless professionalism, and a great hunger to play for England. He is someone I have the utmost respect for and I wished him all the best, he in turn wished the team well this summer.
"Of course I must respect his decision to retire. He has been one of England's finest players, but I want to look to the future."
Cole made his international debut against Albania in March 2001.
He became only the seventh England player to reach a century of caps when he appeared in a friendly win over Brazil in February 2013.
But his opportunities at club level have been limited this season.
The former Arsenal player made only one substitute appearance in three months from late January for Chelsea, although he did return to the side against Liverpool and Atletico Madrid.
It had been thought he might leave Chelsea this summer, but boss Jose Mourinho hinted this week that the veteran could yet stay at Stamford Bridge.
Best of luck Ashely Cole, U don try............
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