The 33-year-old Rayudu is one of the key members of the Indian ODI side but has never played Test cricket.
"This is to inform that Ambati Rayudu, Hyderabad captain and member of the India ODI team, has decided to retire from longer version of the game including Ranji Trophy (multi day) to focus on limited overs cricket and T20 cricket," Hyderabad Cricket Association said in a press release.
"He will continue to play international and domestic matches of shorter version. He has thanked BCCI, Hyderabad Cricket Association, Andhra Cricket Association, Baroda Cricket Association and Vidharbha Cricket Association," the release further stated.
Rayudu, who recently made a comeback in the Indian team by virtue of a successful IPL for Chennai Super Kings, is being seen as India's number four batsman going into the ODI World Cup in England.
He recently had a productive ODI series against West Indies, scoring 217 runs with a hundred and half-century, prompting both skipper Virat Kohli and coach Ravi Shastri to single him out for special praise.
There is a possibility that Rayudu, who will next play for India in January and February in eight ODI matches against Australia and New Zealand, wanted to conserve his energies as he doesn't want to fail another fitness test.
Earlier this year, Rayudu had failed to make the ODI tour of England despite being selected after he failed to clear the mandatory Yo Yo test. It was then widely believed that due to the exhaustion of IPL, where he scored 600 plus runs for CSK, the Hyderabad batsman couldn't clear the 16.1 mark.
According to sources in the know of things, Rayudu probably didn't want to exhaust himself by playing gruelling Ranji Trophy as it might affect his Yo Yo test performance before the tour of Australia.
With virtually no chance of donning the India whites, Rayudu called time on his 17-year-long first-class career in which he scored 6151 runs from 97 games. This included 16 hundreds at a healthy average of 45.56 and highest score of 210.
It was only natural that Rayudu, who has scored 1447 runs in 45 ODIs at an impressive average of 51.67, decided to concentrate on the format which has paid dividends for him. Also the fact that he is an IPL regular made his choice easier.
However, it was the longer format where a 16-year-old Rayudu initially made his mark in the Ranji Trophy for Hyderabad before a tiff with erstwhile HCA boss Shivlal Yadav's son Arjun made him shift to Andhra.
He did comeback before joining the rebel Indian Cricket League and was banned by the BCCI. He then got amnesty and was back in Hyderabad.Later, he shifted to Baroda where he played for number of seasons and also made his senior international debut during that period.