Ballack, 34, has won 98 caps for his country but has not played for Joachim Low's side since before last summer's World Cup, a tournament he missed with an ankle injury.
The former Chelsea midfielder could only watch as Germany impressed in South Africa with a new generation of young players, taking the nation to a third-placed finish.
Game over: Ballack's international career has come to a close
And with Ballack failing to make an impact following his move back to Bayer Leverkusen, the Federation (DFB) have decided to end months of speculation by stating he will no longer be selected for competitive action.
Low said: 'Over the last few months, many young players have come into focus and the development of the team has run smoothly since the 2010 World Cup.
'We have discussed the issue of Michael Ballack several times, most recently in late March 2011, and it has come to a stage to make a clear decision. In our conversations, I had the impression that Michael had some sympathy for our view.'
Crocked: Ballack missed out on last summer's World Cup following this challenge with Kevin Prince Boateng
Low added on www.dfb.de: 'For a decade, Michael Ballack has been a leading player in the national team and had an enormous stake in the success of the team since the 2002 World Cup.
'His ability and class speak volumes, as do his eye for goal and his nerves of steel, especially in big games.
'We (the DFB) would like to say a sincere thank you for his great contribution to German football.'
DFB general secretary Wolfgang Niersbach added Ballack would be invited to make a 99th and final appearance in a friendly against Brazil in August.
'He has known about this fixture for a long time, we hope he accepts the offer,' said Niersbach.
Ballack made his name at Kaiserslautern before joining Leverkusen in 1999. Four-year spells at Bayern Munich and Chelsea followed before he returned to Leverkusen at the start of last season.
Legend: Ballack has been asked if he would like to make one final appearance in a friendly against Brazil
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Source: Daily Mail
Source: Daily Mail