But while that was rumoured to be his final appearance for Ireland, he will continue for at least another 12 months following his fourth British & Irish Lions tour this summer.
"I want to thank the IRFU and Leinster for allowing me the time to think about my future and discuss my options with my family," said O'Driscoll.
"The support my family and the Irish and Leinster fans have shown me over the past few months, and indeed years, has been phenomenal and I am now very much looking forward to one more year playing with Ireland and Leinster."
Schmidt, who at the end of the season will leave his role at Leinster to become head coach of Ireland, added: "It's great that Brian has agreed to continue playing. He's an inspirational player, not only on the pitch, but also on the training ground.
"He's played well again this season and other players continue to learn from him. I know that every squad of which he is a part will profit from his qualities both as a rugby player and a person."