The Norwegian, who moved to Old Trafford 11 years ago and scored the winner in the 1999 Champions League final, has decided to step down after continuing problems with a knee injury.
It is believed that Solskjaer will remain at the club in a coaching capacity and will represent Manchester United as an official ambassador.
Solskjaer said: "I would like to thank the manager, the coaching and medical staff and most of all the supporters, who have supported me through my career. They have been fantastic and were a real inspiration to me when I was out injured."
United manager Sir Alex Ferguson said: "Ending your playing career is a sad day for anyone, in the case of Ole, he has 11 fantastic years he can look back on. Ole has achieved everything a player could ever wish to achieve.
"He has been a great servant to the club and has always remained a model professional in his responsibility as a player, in his demeanour and his manners have always been exemplary. Ole will hopefully go on to be a good coach.
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