"At the moment, he looks like a player trying to eke out a career; build on a glittering array of statistics," Chappell wrote in a column in Mumbai-based tabloid Mid Day on Friday.
"If he really is playing for that reason and not to help win as many matches as he can for India, then he is wasting his time and should retire immediately.
"Before anybody else makes a decision on what will happen to Tendulkar, the player himself has to have a good long look in the mirror and decide what he's trying to achieve in the game."
The 33-year-old holds a host of records in both forms of the game, but has been a shadow of his former self in recent times.
At this World Cup, where India tumbled out in the first round in the Caribbean, Tendulkar failed against Bangladesh and Sri Lanka and notched up a half century against Bermuda.
Chappell, whose younger brother Greg is India coach, drew a parallel between Tendulkar and Brian Lara and said the West Indian left-hander had not changed his style over 17 years.
WORLDS APART
"When you think that for a decade Brian Lara and Tendulkar went head-to-head
"Lara's quick-footed tip toe through a terrific innings against a good Australian bowling attack when the rest of the West Indies top order succumbed easily was in direct contrast to Tendulkar's stumbling effort in the crucial Sri Lanka match."
Chappell conceded that Tendulkar had suffered due to injuries.
"Tendulkar hasn't been as lucky as Lara; the Indian batsman has suffered a lot of injuries in this period where his play has deteriorated and there is nothing that melts your mental approach quicker than physical handicaps."
But the Australian said this was no excuse.
"For whatever reason Tendulkar hasn't been able to maintain his extremely high standards for the last few years and unless he can find a way to recapture this mental approach he's not doing his team or himself any favours.
"If Tendulkar had found an honest mirror three years ago and asked the question: 'Mirror, mirror on the wall who is the best batsman of all?' It would've answered: 'Brian Charles Lara'.
"It he asked that same mirror right now: 'Mirror, mirror on the wall should I retire?' The answer would be: 'Yes,'"
Warm welcome for Ganguly in Kolkata
Column: Blame BCCI, not the players
Images: India's fallen heroes return home
Mr Tendulkar, it is time for you to retire