The 31-year-old will leave the Waratahs after the Super Rugby play-offs, while he is hoping for one last hurrah with Australia at the World Cup.
Waugh, who will lead his side out against the Blues on Friday for a place in the play-off semi-finals, has been capped 79 times by the Wallabies since making his debut in 2000.
And although he has not played for the side since 2009, he hasn't given up hope of appearing for Australia once again before quitting.
"I've been very humbled and very proud to have represented Australia over a decade ... and I hope to increase on that number of Test caps," Waugh said.
"It's obviously a big year for rugby and I want to be a part of that World Cup squad.
"I'm very proud of my career and what I've achieved and, in terms of rugby memories, I hope that my fondest memories occur over the coming months."
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