The Hull City striker made 36 appearances for his country, scoring six goals.
The news was announced a day after Croatia's 1-0 win over Bulgaria in their Euro 2016 qualifier, of which Jelavic played no part.
Jelavic has often been restricted to a substitute's role for Croatia, with Atletico Madrid's Mario Mandzukic usually preferred in the lone striker's role by coach Niko Kovac.
"I admit that I was surprised," Kovac conceded. "But of course I accept his decision.
"I thank him for all that he has given the Croatia national team. I can only wish him all the best in life, and so in his club career."
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