Since taking the job in 2013, New Zealander Schmidt has overseen the team's most successful period, winning three Six Nations titles and enjoying victories over All Blacks and a series of triumphs in Australia, among others.
"I have decided to finish coaching and will prioritize family commitments after the RWC (World Cup) in 2019," Schmidt said through an IRFU statement.
"There are some inspirational challenges over the next 11 months, so there is plenty of motivation to continue working hard alongside other management staff so that the team can be as competitive as possible."
Ireland's coach Joe Schmidt checks out pitch conditions ahead of the rugby union test match between Ireland and New Zealand at the Aviva stadium in Dublin on November 17, 2018.Getty Images
IRFU chief executive Philip Browne has hailed Schmidt's contribution after the 53-year-old was named 2018 World Rugby Coach of the Year on Sunday.
"Sports has the ability to lift people out of the day-to-day concerns of life and Joe and his team have provided historical moments of great joy that will live long in the memories of everyone in the rugby family," Browne said.
"Of course, this is not the end, and we are looking forward to an exciting and challenging 11 months for Irish Rugby during Joe's final Six Nations and the Rugby World Cup in Japan."
Former dual-code international Farrell also paid tribute to Schmidt, the Englishman saying it was a privilege to be considered for such a "prestigious role" at the world number two-ranked side.
Andy Farrell, (L) the Ireland defense coach talks to Jonathan Sexton during the Irish captain's run at Twickenham Stadium on March 16, 2018 in London, England.Getty Images
"I've learned a lot from Joe over the past few seasons and I will continue to learn from him over the next year as the coaching group and players focus on competing in two huge tournaments in 2019," Farrell said.
Ireland started the defense of their Six Nations title at home in England in February, before heading to the World Cup, where they were drawn to Pool A with hosts Japan, Scotland, Russia and Samoa.