England manager Roy Hodgson called Cole on Sunday night to inform him that he would not be in his 23-man squad for the tournament in Brazil.
The Chelsea defender, who has 107 caps, then took to Twitter to announce his retirement from the international arena.
Cole tweeted: "I got the call from Roy and agree England team should be about the young players. I think it best I retire from England team now."
Cole made his international debut against Albania in 2001 and had been a regular in the England side since.
The 33-year-old has started every tournament game since making his finals bow in the 2002 World Cup against Sweden and he is the country's fifth most-capped player.
The former Arsenal defender has performed well for his country at the 2002, 2006 and 2010 World Cups.
But he was always going to find it hard to earn a place in Hodgson's World Cup squad after losing his first-team place at Chelsea to Cesar Azpilicueta, who normally operates at right-back.
And Luke Shaw's emergence at Southampton finally put an end to Cole's World Cup dreams.
Cole will now have the entire summer to decide where his future lies.
Chelsea manager Jose Mourinho wants him to stay at Stamford Bridge, but Press Association Sport understands the Londoner, who cried following the club's final home game of the season, is likely to leave.
Several clubs in Europe and the United States have expressed an interest in Cole, who moved to the west London club in 2006.
Cole's exclusion means Shaw is almost certain to be included in Hodgson's 23-man party for South America when it is announced on Monday at 2pm in Luton.
Shaw has only made the left-back position at Saints his own this year, but the defender has been so impressive that he was voted into the PFA team of the year by his peers last month.
Shaw, who turns 19 two days before the World Cup final, came through Saints' famed youth academy and made his debut for the south-coast club against Millwall in the FA Cup in January 2012.
The teenager's pace, power and willingness to get forward have made him one of the most exciting players to watch in the Barclays Premier League this year.
Yet, even up to last week, it was by no means a certainty that he would get the call for Brazil ahead of Cole.
With Cole having so much experience of playing at the top level, both for club and country, he seemed the easy option for Hodgson, who has stated that Baines is now his first-choice left-back.
But the England manager once again defied the notion that he is a conservative coach by selecting Shaw.
Hodgson spoke about Shaw in glowing terms after handing the teenager his first call-up for the friendly win over Denmark two months ago.
Shaw impressed in a 45-minute substitute appearance against the Danes and Hodgson said: "Anyone who has watched him play would not deny he deserves a place.
"We are very well off in this position but he wants to compete for a place on the plane to Brazil."
Cole may not be the only big-name player to miss out on the 23-man squad, which is being announced at the home of England sponsor Vauxhall.
Cole's Chelsea team-mate Frank Lampard, who has 103 caps, will also be nervously awaiting a phone call from the England manager on Monday.
The emergence of Jordan Henderson and Ross Barkley has put pressure on Lampard, who is no longer assured of a first-team place at Stamford Bridge.
Barkley, Shaw, Henderson and Liverpool teenager Raheem Sterling have breathed fresh optimism into England fans' hopes for Brazil.
The young players within the 23 will gain experience looking ahead to Euro 2016 - a tournament where England stand a much better chance of doing well - but Hodgson has warned they will be expected to make an impact at the World Cup too.
"Euro 2016 is in the back of my mind, but not in the forefront," he said.
"If there are young players in the squad it will be because they can do a job now.
"It will then be a bonus in 2016 as they will be experienced and hopefully that will serve us in good stead, but I don't intend to put them in the squad because of 2016."
Hodgson's defensive selection looks pretty straightforward.
The former Fulham manager said in March that his four centre-backs for the World Cup would be Gary Cahill, Phil Jagielka, Phil Jones and Chris Smalling.
Only if Jones is deemed unfit due to a recent shoulder problem will Everton teenager John Stones or Cardiff's Steven Caulker be called up.
Kyle Walker may miss out because of a pelvic problem which has kept him out for two months.
Tom Cleverley and Michael Carrick are in danger of missing out due to their poor seasons with Manchester United.
Daniel Sturridge, Wayne Rooney and Danny Welbeck look set to be Hodgson's three main strikers.
Hodgson is a fan of Rickie Lambert, who is fighting it out with Andy Carroll for a fourth striker place. Jermain Defoe is sweating on his inclusion after swapping Tottenham for Toronto in March.
Joe Hart and Ben Foster are expected to be first and second-choice goalkeepers. John Ruddy, Fraser Forster and Jack Butland are vying for the third slot.
Hodgson will also name up to seven standby players, who will be drafted in should injuries occur in the warm-up camps in Portugal and Miami.
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