Peacock will quit the team with immediate effect, meaning the search is on for a new England captain.
Peacock made his first appearance for England against Russia in the 2000 World Cup, and played in an England win against the Exiles earlier this month in what was his final game.
The prop will continue to play at Super League level for Leeds, having just extended his contract with the club until 2014.
"The last achievement I felt I could have with England would be to right the wrong and beat the Exiles team and this has happened," he said in a statement.
"To play and captain your country is the highest honour within the game and this was a decision that was not taken lightly.
"In 2000, when I made my debut, it was beyond my wildest ambition and dreams that I would then go onto represent my country nearly 50 times and captain them for seven years.
"I felt that the time would be right for me to step down and solely concentrate on playing for my club.
"The focus for Steve McNamara and the England team has to be the objective of trying to win the Rugby League World Cup next year and for the next generation of players to be part of that process.
"While I feel there are deficiencies within Super League, the one aspect for me that made this decision easier was the huge amount of exciting young talent coming through the elite competition in this country.
"I feel now is the time for the younger players to rise to the challenge of trying to be the dominant force in world rugby league over the next few years."