Marsh led the Warriors to last season's Shield title, and they will attempt to go back-to-back when they host the final against either Victoria or Queensland from March 23.
But Marsh, who is on the comeback trail from a broken finger, has decided to pull the pin before then, bringing an end to his glittering 22-year career with WA.
The 39-year-old will continue playing in the BBL, where he has another year to run on his contract with the Melbourne Renegades.
Marsh has battled knee, hamstring and calf injuries since the end of last season, and last month fractured a finger while playing a Shield match for WA.
Despite not having the chance to add another title to his resume, Marsh ends his state career as one of the greatest ever players to feature for WA.
Marsh (8347 runs) sits third on the all-time WA Shield runs list, behind only Tom Moody (8853) and Justin Langer (9406).
His career has featured 20 Shield centuries and an average of 42.37.
Marsh's highest score of 214 not out came in October 2019 against Victoria, a match which WA won by nine wickets.
Marsh sits on top of WA's one-day cup all-time runs list with 3672 at an average of 44.78.
The veteran run machine stepped away from WA's one-day team at the end of last season in order to give space for younger players to feature.
Marsh also played 38 Tests, 73 ODIs and 15 T20s for Australia.
Since his international career came to a close in 2019, Marsh has continued piling on the runs for WA and the Renegades.
Meanwhile, star WA paceman Jhye Richardson will meet with specialists this week to determine whether he needs surgery on his left hamstring.
Richardson first injured his hamstring during last summer's one-day cup final.
He suffered another strain while featuring for the Perth Scorchers on January 4, and his hopes of appearing for Australia in the upcoming ODI tour of India were dashed when he repeated the injury last week while playing club cricket.
