The 34-year-old winger, whose contract at French club Toulon expires in June, confirmed the news on Instagram.
"The inevitable moment has come knocking on my door and I've welcomed it in for a drink." he said.
Habana scored 67 tries in the 124 Test appearances he made for the Springboks and his last international appearance was in 2016 when he was also vice-captain.
The electric winger underwent knee surgery last year and has struggled to make an impact at Toulon this season.