Paul will take on a coaching role with United from the start of next season. Fans will also have the opportunity to see Paul play again at Old Trafford in his testimonial match in August.
Paul Scholes said: "I am not a man of many words but I can honestly say that playing football is all I have ever wanted to do and to have had such a long and successful career at Manchester United has been a real honour. This was not a decision that I have taken lightly but I feel now is the right time for me to stop playing. To have been part of the team that helped the club reach that 19th title is a great privilege.