Schmidt was drafted in as head coach after a successful spell at the Irish provincial team Leinster where he won successive European Cups in 2011 and 2012.
He will be replaced after next year's World Cup in Japan by the defence coach Andy Farrell.
Schmidt says he will spend more time with his family. "I have decided to finish coaching and will prioritise family commitments after the World Cup in 2019," Schmidt said. "I feel that Irish rugby is in good hands.
"The management and players have been incredible to work with and the tremendous support we have had, particularly at home at Lansdowne Road, and wherever we have travelled has been uplifting."