Afridi, who played the last of his 27 tests in 2010, announced last year that he planned to bow out of international cricket after the World Twenty20 in India.
"Today I wish to inform my fans in Pakistan and all over the world that I am relinquishing the captaincy of the T20 Pakistani team of my own volition," the cricketer said in a statement.
"I intend to continue to play the game for my country and league cricket."
Under Afridi, Pakistan lost three of their four group matches, including one against arch-rivals India, and failed to reach the last four of the World Twenty20.
After defeat to Australia in their final match of the tournament nine days ago, Afridi told reporters: "I'm going to go back home and in the next four to five days I will take a decision and whatever is better for the country, I will go with that."
(Reporting by Amlan Chakraborty in Kolkata; editing by Clare Fallon)
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