Brian Snyder/Reuters
Rodriguez made the announcement at a joint press conference Sunday morning with New York Yankees general manager Brian Cashman and manager Joe Girardi.
Rodriguez will become a special advisor for the Yankees, working with minor leaguers.
The Yankees will still owe Rodriguez the remaining $21 million on his contract through next season.
The Yankees will play five more games before the retirement, including three games at Fenway Park against the Boston Red Sox. A-Rod's final game will be on Friday at Yankee Stadium against the Tampa Bay Rays.
Rodriguez says that he has not talked to the team about playing against the Red Sox, however, he says he was told he would receive "a few at bats" against the Rays on Friday.
When asked why Friday would be his last game, he said it was "logistics," noting that he asked the Yankees to play one more game at home in front of the Yankees fans and with his family in attendance.
Rodriguez has 696 career home runs, fourth on the all-time list, and has won three American League MVP awards.
A-Rod was famously suspended for the entire 2014 season after admitting to taking performance-enhancing drugs. It was the second time he had admitted to taking banned substances.
Rodriguez returned in 2015 to have a surprisingly strong season, hitting 33 home runs. However, this season he has been relegated to part-time player, starting just 55 games, all as a designated hitter. his playing time became even less recently, starting just nine games since the start of July.