The 39-year-old captain posted a long letter on his Facebook page Wednesday saying that 2014 will be his final year.
A 13-time All-Star who has led the Yankees to five World Series championships, Jeter was limited to 17 games last season while trying to recover from a broken left ankle sustained in the 2012 playoffs.
"I know it in my heart. The 2014 season will be my last year playing professional baseball," he wrote.
Jeter was the last link to the powerful Yankees teams that won three straight World Series crowns from 1998-2000. Longtime teammates Mariano Rivera and Andy Pettitte retired after last year.
"Last year was a tough one for me. As I suffered through a bunch of injuries, I realized that some of the things that always came easily to me and were always fun had started to become a struggle," Jeter wrote. "The one thing I always said to myself was that when baseball started to feel more like a job, it would be time to move forward."
"So really it was months ago when I realized that this season would likely be my last. As I came to this conclusion and shared it with my friends and family, they all told me to hold off saying anything until I was absolutely 100 percent sure," he wrote.
"And the thing is, I could not be more sure," he wrote.
His agent, Casey Close, said Jeter wanted to declare his intentions before the Yankees start spring training later this week so that his future status wouldn't be a distraction.
Jeter is the Yankees' career hits leader with 3,316. He is a lifetime .312 hitter in 19 seasons, with 256 home runs and 1,261 RBIs.
Jeter has scored 1,876 runs and stolen 348 bases. He also is a five-time Gold Glove winner.
Last season, Jeter hit just .190 with one homer and seven RBIs.
Jeter has said he's fully ready for spring training this year and set to play.
Jeter worked out at the Yankees' spring training complex on Wednesday and left around noon, giving no hint that he was about to announce his plans.