Waugh is moving into a television commentary role and will leave his position with Australia after the tours of England and Zimbabwe.
The 52-year-old, who played 128 Tests and 244 one-day internationals for Australia, has been a national selector for four years, focusing on Twenty20s since 2017.
"We thank Mark for his service over the past four years and the great job he has done as a national selector," Cricket Australia (CA) executive general manager of team performance Pat Howard said.
"Being a selector is not an easy task, and Mark has made an important contribution to Australia's on-field success alongside his fellow panel members.
"Mark was specifically brought in for white-ball cricket and he should be very pleased with his contribution to the 2015 World Cup victory.
"In recent times, Mark's in-depth knowledge of the T20 game and the KFC Big Bash League has come to the fore.
"As lead selector in this format, he has identified talent in the Big Bash League and helped to create a strong Australian T20 squad, which has risen up to second on the ICC rankings and laid a platform for what we hope will be a successful World T20 campaign in 2020 on home soil.
"We're disappointed to lose Mark, but wish him all the best in his new role and we are pleased he will still have heavy involvement in the game."
CA said it would make a decision on its structure or a possible replacement for Waugh "in due course".