Shevchenko retired after captaining his country to a group stage exit at Euro 2012 on home soil, but the former-AC Milan and Dynamo Kiev star said the chance to jump into management had just come too soon.
After a brief flirtation with politics - Sheva run for election to the Ukrainian parliament in October but lost - the ex-Chelsea flop was offered a route back into football.
Oleg Blokhin had coached Ukraine to Euro 2012, but quit to take charge of Dynamo Kiev, and the Ukrainian FA last week offered the opportunity to replace Blokhin to Sheva.
But the 36-year-old felt the chance had just come too early for him this time around.
"I believe that today leading the national team of Ukraine is a somewhat premature step for me," said Shevchenko in a statement published on the Ukrainian Football Federation's website.
"I hope the leadership of the Football Federation will understand my decision."
Ukraine, who were in England's Euro 2012 group and played out a 1-1 draw, are also in Roy Hodgson's World Cup qualification group for 2014, and drew 1-1 with the Three Lions at Wembley in September.
Shevchenko spent three years at Stamford Bridge after his £30m move from Serie 'A'. But the Ukrainian goalscoring legend failed to live up to expectations at Chelsea, and was eventually released on a free transfer by the Blues in 2009.