The big-hitting 38-year-old played 57 one-dayers and 22 Twenty20 Internationals for India after beginning his career in the shadow of younger brother and test bowler Irfan Pathan.
"The time has come today for me to put a full stop to this innings of my life," Yusuf said.
India were bundled down for a record low of 36 in Adelaide and regular skipper Virat Kohli left a demoralised team behind him as he returned home to attend the birth of his daughter.
I'm not someone who really has tears in my eyes but I had real tears because this is unreal.
India captain Ajinkya Rahane and other senior players spoke to the umpires at the end of the third day's play after quicks Jasprit Bumrah and Mohammed Siraj complained of hearing racist slurs while fielding near the boundary rope.
"Cricket is a gentleman's game and these kinds of things are not allowed or accepted."