The veteran hooker, who has played for Australia 120 times, is the tenth most-capped international of all-time.
The veteran hooker, who has played for Australia 120 times, is the tenth most-capped international of all-time and second only to George Gregan (139) as the most-capped Australian.
Moore, 34, will play for the Wallabies in the Rugby Championship, kicking off against the All Blacks in Sydney next month, before ending his international career after Australia's European tour in November.
"I've been very lucky to have played as long as I have, and I'm incredibly grateful to the Wallabies and Australian Rugby for all it's done for me," Moore said.
"There's still plenty of footy to go this year but I know the Wallabies will be left in very strong hands if we continue to work hard and stay grounded."
"As of the next Test I will be handing over the captaincy, and will spend the next four months supporting the new leadership team in any way possible."
He was named Wallabies captain in June 2014, with Michael Hooper tipped to take over.
Moore, who is also the second-most capped Super Rugby player of all time, made his Test debut against Samoa in June 2005 and has played in three World Cups for Australia.
"Stephen still has a big role to play within the team," Wallabies coach Michael Cheika said.
"This isn't a farewell right now, he's fully committed to getting the (Wallabies) gold jersey back to the top this year."
"His contribution to this current team cannot be understated. What he's achieved on the field is no mean feat but it's his work off the field in his role as captain of Australia that has really impressed me."
"We now have to make sure we send him off in the best way possible this year," Cheika added.
The signs were that Moore was under pressure to hold on to his Test spot when he was dropped to the bench for the home Tests against Fiji and Scotland last month.
Cheika said at the time Moore was still the team's captain, with openside flanker Hooper only taking on the responsibility on match day, and insisted he had a role to play at the 2019 World Cup in Japan.
However, Moore appears to have changed his mind since then in coming to his decision on Thursday.
It is not clear who will succeed him at hooker for the Wallabies.
Tatafu Polota-Nau replaced Moore when he was benched in June but the Western Force player is just two years younger at 32, while the only other hooker in this year's squad is under-20s star Jordan Uelese.
Moore said he intended to play the 2018 season with the Reds after rejoining them this year from Super Rugby rivals ACT Brumbies.
"When I made the decision to return to Queensland, I felt it was important to give back to the Reds and help them develop the next generation of leaders," he said.
"While we've had some disappointing results this season, we've definitely seen growth in the side and the emergence of some genuinely talented, competitive young players."
"I think the future of the Reds is in good hands if we apply ourselves and stay grounded."