Star striker Cahill said he only found out about the decision by goalkeeper Schwarzer, Australia's most capped player, when the news became public early on Wednesday morning.
"It's incredible. I feel it's a massive surprise from someone that I've looked up to my whole career," Cahill said.
"He's one of the greatest ambassadors to ever play the game, but most importantly a true gentlemen on and off the park.
"It's a truly shocking night here in New York for me."
Asked whether he thought 41 year-old Schwarzer had called time on his international career too soon, Cahill said it was difficult to say.
"He's called it a day and players make up their own mind. Whether it's the right time, no-one knows," Cahill said.
"But the best thing is he's all class, the way he's done it is exceptional.
"I feel Schwarzer's seen the talent and he's probably thought `You know what, the kids are ready' and he stepped aside.
"It shows the true mark of a man that he can do what he's done today, hang up his boots or gloves from playing internationally."
Cahill said he hoped the veteran of 109 international matches would remain a part of the Socceroos in some form and mentor his replacement - whether that be Mitch Langerak, Eugene Galekovic, Mathew Ryan or one of the country's other talented goalkeepers.
"Even though Schwarzy might not have played, (it would be good) to have that experience on the bench, to be the mentor to Langerak or the next goalkeeper that's going to take his place," Cahill said.
"His experience, obviously in the last campaign just getting to this World Cup, was priceless."
Cahill admitted Schwarzer's departure did mark something of a changing of the guard within the Socceroos, following Holger Osieck's sacking and the installation of new coach Ange Postecoglou.
"It's definitely a transitional period with the national team," he said.
"I feel now the country, the federation and obviously football in general is getting behind the bigger picture.
"The bigger picture is not so much this Brazilian World Cup and the Asian Cup, it's the next World Cup and how we're going to develop new talent that's going to make sure we qualify for every competition possible moving forward as a generation."
Cahill refused to speculate what impact Schwarzer's move might have on under-pressure captain Lucas Neill's future in the team.