The midfielder earned 66 caps scoring 14 goals, the highlight of which was a hat-trick in Kevin Keegan's first match as manager, a World Cup qualifier against Poland.
Scholes came underfire for his performances at Euro 2004, with some pundits believing his presence in the team restricted Eriksson as the Swede could not select Frank Lampard and Steven Gerrard in their favoured positions.
The Oldham-born player himself admitted his recent international displays did not warrant selection at times, but even so, his loss will leave a massive hole in England's World Cup qualifying plans.
Scholes said: "I started my international career in 1997 and have enjoyed seven years of great football, playing in the best competitions, with some of the best players under the best managers.
"Euro 2004 was fantastic but afterwards I felt the time was right for myself and my family to make it my last England appearance. I would like to thank everyone at England for the wonderful years I had playing for the team and all the experience I gained. I wish them all the best and good luck for the future."
Scholes is expected to figure for United tonight in a pre-season friendly against PSV Eindhoven at Old Trafford.
Manchester United have confirmed that Sir Alex Ferguson will give his view about Scholes's surprise decision after the game.
