The 39-year-old will play his 88th Test in the Ashes finale against England starting on Sunday (23:30 GMT, Saturday) in Sydney, on the ground where he made his debut against the same opponents in 2011. BBC reported.
Khawaja was born in Pakistan and became the first Muslim to play for Australia when he took the place of Ricky Ponting at the end of England's 3-1 series win 15 years ago.
"I'm a proud Muslim, coloured boy from Pakistan who was told he would never play for the Australian cricket team," he said. "Look at me now."
The left-hander made his announcement at the Sydney Cricket Ground on Thursday in an emotional 50-minute news conference attended by his wife, two daughters and parents.
Referring to the beginning of this series, when he played golf the day before the first Test and subsequently suffered back spasms in Perth, Khawaja said he was criticised because he is "treated differently".
"The way the media and the past players came out and attacked me - I could have copped it for two days, but I copped it for about five days straight," he said.
"The way everyone came at me about my preparation was quite personal in terms of 'he's not committed to the team', 'he was only worried about himself', 'he played this golf comp the day before', 'he's selfish', 'he doesn't train hard enough', 'he didn't train the day before game', 'he's lazy'.
