The 34-year-old Oram, who played 33 tests and 160 one-day internationals, secured an early release from his contract, NZC said in a statement on Saturday.
"This was a very difficult decision but in recent weeks I have come to the conclusion that I can no longer make a full-time commitment to NZC," Oram said in the statement.
"Various factors have led me to make this decision including my age, the stage of my career and the impending birth of my second child.
"I really enjoy the Twenty20 format and see it as a way to stay involved in cricket for a while longer."
Oram, who quit test cricket in 2009 in a bid to prolong his career, has struggled with injuries in recent years and managed only one ODI and a T20 match against Sri Lanka on tour in October and November.
He was left out of the team's T20 tour squad for South Africa and would be unlikely to feature in New Zealand's three one-day matches against the Proteas from Jan. 19-25, a NZC spokesman said.
Oram would continue to play T20 cricket for domestic side Central Districts and play in competitions overseas, he said.
However, the door would still be open for his return to international cricket again, NZC said.
A powerful striker of the ball, the 1.98 metre (6-ft-6in) left-hander compiled over 1,780 test runs at an average of over 36 and 2,434 runs in ODIs.
He also netted 60 test wickets with his right-arm medium pace bowling and 173 ODI wickets at an average of just over 29.
NZC said it would offer another player to take over Oram's contract for the remainder of the period to July 31. (Reporting by Ian Ransom in Melbourne; Editing by Sudipto Ganguly)
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