Mr Frydenberg has been appointed chairman of investment bank Goldman Sachs' Australian business.
He joined the firm as an adviser last year after losing his blue-ribbon Liberal seat of Kooyong in Melbourne to teal independent Monique Ryan.
Before joining the investment bank, he served as treasurer throughout the COVID pandemic under the Morrison government.
Opposition Leader Peter Dutton, who spoke to his former cabinet colleague on Thursday, wished him well in the next stage of his career.
"He's a young man still, and hopefully can work his way back into public life at some point," Mr Dutton said.
"But he's announced today he's not going to contest the seat of Kooyong at the next election."
Mr Frydenberg was elected to parliament in 2010 and served in several senior positions, including as minister for environment and energy, before becoming treasurer in 2018.
A statement released by Goldman Sachs said Mr Frydenberg would focus on "deepening and strengthening client coverage across the Australia and New Zealand region".
"He will continue to offer advice on economic and geopolitical issues as the firm's senior regional adviser for Asia Pacific," the statement said.
The appointment has strong backing in the corporate sector.
"It's great to see leaders from the public sector like Josh transition to leadership roles in the private sector," Woolworths chair Scott Perkins told AAP.
"More than ever there is the opportunity to learn from the other."
18°C