The 36-year-old Neville signed for United in July 1991 and played 602 games during the club's most successful era, winning the Champions League, eight Premier League titles, three FA Cups, two League Cup titles, the Intercontinental Cup and the Club World Cup.
He would have won even more titles but was increasingly sidelined with recurring injuries, starting only 31 Premier League matches over the past four seasons.
"Gary was the best English right back of his generation," United manager Alex Ferguson said. "He is an example to any young professional: hardworking, loyal and intelligent.
"As a United fan born and bred, his fantastic career at Old Trafford has cemented his place in the affection of the club's supporters everywhere."
Neville played 85 times for England, making him his country's most capped right back. He played at the 1998 and 2006 World Cups, missing the 2002 and 2010 tournaments because of injury or lack of match practice.
"I have been a Manchester United fan all my life and fulfilled every dream I've ever had," Neville said. "Obviously I am disappointed that my playing days are at an end, however it comes to us all, and it's knowing when that time is.
"For me, that time is now. I have played in the most incredible football teams, playing with some of the best players in the world as well as against them, and I have been lucky to have been part of the team's achievements and the club's great success."
With David Beckham, Ryan Giggs, Paul Scholes, Nicky Butt and brother Phil Neville, Neville graduated from the side that won the FA Youth Cup in 1992 to provide the platform for United's dominance of English football.
Stung by the failure to win a trophy in 1996, Ferguson sold stalwarts Paul Ince, Mark Hughes and Andrei Kanchelskis to make space for the youngsters.
Neville replaced England international Paul Parker as first-choice right back as United immediately won the Premier League and FA Cup double.
