The New Zealander, who assumed control in early 2024 after the disastrous reign of Eddie Jones, will hand over to Les Kiss following the game in Perth and transition to semi-retirement.
His tenure has failed to deliver the results Rugby Australia craves as it builds towards hosting the World Cup next year, with just 11 wins from 30 Tests.
The Wallabies head into Saturday's clash on the back of six straight losses after their 42-26 capitulation to powerhouse France in Brisbane last week.
"I'm nervous. I'm always nervous," said Schmidt, who won three Six Nations championships as Ireland coach. "I'd just love them (the team) to put it all together for a long enough period of time.
"But I know how good Italy are. I think they're really well coached ... so I know we're in for a really tough battle.
"Outside of feeling nervous, I feel a little bit lost," he added. "You know, when you work really hard week-to-week and you're always planning ahead, and the planning ahead has sort of disappeared."
Australia's problem has been their failure to capitalise on strong starts, with sluggish second-halves a key factor in both of their Nations Championship defeats.
They were ahead 21-12 against France at the break before Les Bleus ran in 30 unanswered points as the stunned Wallabies went to sleep.
A week earlier, they coughed up a 12-point lead in a 33-31 loss to Ireland.
"You know, a couple of mistakes make the difference, but it's been incredibly frustrating, and it's been frustrating because I just keep feeling that we're not far off," said Schmidt.
Brandon Paenga-Amosa, who played 77 minutes last weekend after starting hooker Josh Nasser copped a head knock, has kept the number two jersey while Harry Potter replaces an injured Dylan Pietsch on the left wing.
Italy are similarly chasing a much-needed victory after losing five of their last six Tests, including the Nations Championship openers to Japan (27-10) and New Zealand (47-17).
They head into the game without coach Gonzalo Quesada who has been suspended for two Tests after lashing out at the referee following the All Blacks defeat.
Experienced lock Niccolo Cannone will also be missing after being banned for four games over a headbutt in last week's defeat, while injuries have forced fullback Tommaso Allan and No.8 Lorenzo Cannone to return home early.
It had led to nine changes to the starting XV.
Assistant coach German Fernandez, standing in for Quesada, said that "behind every difficulty lies an opportunity" and backed the side to come good.
"The most important objective for this third match is to control the pace of the game," he said.
"To take the initiative and manage our attack with balance, using footwork, attacking with our hands, accelerating, and playing in a more organised manner.
"The match against New Zealand was the most intense of the year, both in terms of the amount of play and the pace," he added. "It was incredibly demanding, so we need to work hard on that aspect. But the atmosphere is positive."