The 31-year-old's start to the season has been delayed by COVID-19 lockdowns and an injury and the quick has decided to call time on representing his country.
Pattinson played for Australia 40 times and had been expected to add to his 21 Test appearances in the upcoming series against England, which is due to start at The Gabba on December 8.
"Leading into pre-season I really wanted to give the Ashes a crack but in the end, I haven't had the preparation I would have liked heading into the coming season," Pattinson said in a statement.
"If I was to be part of the Ashes I would need to do myself and my team-mates justice. I didn't want to be in a position of battling with my body when you need to be 100 per cent fit and ready to go at any time. That would not be fair to myself or the team.
"It was then I felt that instead of trying to play at the very highest level, knowing I have only got three or four years of cricket left, I would focus more on Victoria, helping the young guys develop, perhaps some cricket in England and spending more time with my family."
Pattinson made his Test comeback against England in 2019 following three-and-a-half years out of the side, having undergone surgery on a serious back injury.
He claimed 81 Test wickets at an average of 26.33, picking up four five-wicket hauls.
Quinton de Kock smashed 67 off 39 balls and a 78-run stand with Ishan Kishan (31) was fundamental in building the foundations for Mumbai's score of 208-5.
Krunal Pandya's explosion in the final over, during which he battered Siddarth Kaul for 20 from four balls, helped Mumbai get to that tally, which seemed to be above par on a slow pitch.
David Warner made a pedestrian start, though he picked up the pace to at least gave Sunrisers a fighting chance until his knock was ended on 60, departing in the 16th over to effectively end their hopes.
There was little help in a disappointing middle-order showing, with pace trio James Pattinson (2-29), Trent Boult (2-28) and Jasprit Bumrah (2-41) doing the damage for Mumbai, who restricted Sunrisers to 174-7.
Victory means Mumbai now have three wins and two defeats from five games to move top of the table, while a third loss for Sunrisers leaves them sixth.
QUINTON DE KOCK OF THE WALK
Rohit Sharma (6) lasted just five deliveries but De Kock and Suryakumar Yadav (27) put on 42 before the big stand with Kishan boosted Mumbai.
De Kock, who hit four fours and as many sixes, was the protagonist of the partnership, contributing 54 of the 78 runs.
LACK OF SUPPORT FOR WARNER
Pandya may have rued putting down Manish Pandey with a sitter at deep point when he went on to put on a 60-run partnership with Warner.
But when Pandey clumsily chipped Pattinson to long off, Warner – who had five fours and two sixes in his 44-ball knock – was not helped by Kane Williamson (3) or Priyam Garg (8).
When Warner got a thick edge to a slower one from Pattinson that was taken with a superb diving catch by Kishan at short third man, the game was up.
Paceman Malinga opted out of the tournament in the United Arab Emirates, which starts on September 19, so he can be with his family in Sri Lanka.
Australia quick Pattinson will fly out to Abu Dhabi to join his new team-mates this weekend.
Indians owner Akash Ambani told the franchise's official website: "James is the right fit for us and adds to our pace attack options available at hand especially for the conditions we will play in this season.
"Lasith is a legend and a pillar of MI's strength. There is no denying the fact that we will miss Lasith's cricketing acumen this season.
"However, we fully understand Lasith's need to be in Sri Lanka with his family during this time.
"Mumbai Indians is founded on the values of 'One Family' and for us the members of our squad and their well-being will always hold utmost importance. We welcome James to our One Family."
