A day after the Cats' premiership captain Selwood's emotional announcement, Dahlhaus confirmed his decision in a club statement.
The 30-year-old played 71 games with Geelong and 154 with the Western Bulldogs, having moved to Kardinia Park as a free agent at the end of 2018.
He was part of the Bulldogs' 2016 premiership side and played in the Cats' 2020 grand final defeat, but missed out on this year's flag.
"I feel very lucky and honoured to have played at two amazing football clubs over 12 years and made friends that I will have for life," Dahlhaus said.
"Thank you to everyone that has supported me along the way."
Geelong football manager Simon Lloyd paid tribute to Dahlhaus' selfless approach.
"Luke has had an exceptional career across two clubs, and we've been very fortunate to have him here in Geelong over the last four seasons," Lloyd said.
"On the field, he often set the tone for our group with his determination and team-first mentality, but he was equally important off the field, where his enthusiasm for teammates and his kind and giving nature made him one of the most popular members of our club."
Geelong are expected to be active in the trade period, having been strongly linked with moves for GWS midfielder Tanner Bruhn and Collingwood forward Ollie Henry.
There is room to move following the retirements of Dahlhaus and Selwood.
The Cats also delisted Quinton Narkle, Francis Evans, Nick Stevens, Paul Tsapatolis and Zane Williams in the days following the grand final thrashing of Sydney.