Sir Alex Ferguson will step down as Manchester United manager at the end of the season after 26 years in charge.
The Scot, 71, has won 38 trophies for the club and will now become a director and ambassador.
His haul includes 13 league titles, two Champions League crowns, five FA Cups and four League Cups.
"The decision to retire is one that I have thought a great deal about. It is the right time," Ferguson said.
Jose Mourinho has been installed as favourite to take over from Ferguson by bookmakers, with Everton's David Moyes and Borussia Dortmund's Jurgen Klopp also in the running.
Ferguson is confident his successor will take over a club in good health after winning their 20th title 17 days ago.
"It was important to me to leave an organisation in the strongest possible shape and I believe I have done so," he said.
"The quality of this league winning squad, and the balance of ages within it, bodes well for continued success at the highest level whilst the structure of the youth set-up will ensure that the long-term future of the club remains a bright one."
Alex Ferguson's Man Utd trophies
Premier League: 1993, 1994, 1996, 1997, 1999, 2000, 2001, 2003, 2007, 2008, 2009, 2011, 2013.
FA Cup: 1990, 1994, 1996, 1999, 2004
League Cup: 1992, 2006, 2009, 2010
Champions League: 1999, 2008
Cup Winners Cup: 1991
Fifa Club World Cup: 2008
Uefa Super Cup: 1992
Inter-Continental Cup: 1999
FA Charity/Community Shield: 1990 (shared), 1993, 1994, 1996, 1997, 2003, 2007, 2008, 2010, 2011
Ferguson praised the people he felt helped him build the club from a team that had not won a title for 26 years into one of the biggest in the world.
"I must pay tribute to my family, their love and support has been essential," he added.
"My wife Cathy has been the key figure throughout my career, providing a bedrock of both stability and encouragement. Words are not enough to express what this has meant to me.
"As for my players and staff, past and present, I would like to thank them all for a staggering level of professional conduct and dedication that has helped to deliver so many memorable triumphs. Without their contribution the history of this great club would not be as rich.
"In my early years, the backing of the board, and Sir Bobby Charlton in particular, gave me the confidence and time to build a football club, rather than just a football team.
"Over the past decade, the Glazer family have provided me with the platform to manage Manchester United to the best of my ability and I have been extremely fortunate to have worked with a talented and trustworthy Chief Executive in David Gill. I am truly grateful to all of them.
"To the fans, thank you. The support you have provided over the years has been truly humbling. It has been an honour and an enormous privilege to have had the opportunity to lead your club and I have treasured my time as manager of Manchester United."
Ferguson is the most successful manager in the history of the British game and famously won a treble in 1999.
Co-chairman Joel Glazer highlighted Ferguson's desire to continue to produce winning teams throughout his time at United.
He said: "Alex has proven time and time again what a fantastic manager he is, but he's also a wonderful person.
"His determination to succeed and dedication to the club have been truly remarkable.
"I will always cherish the wonderful memories he has given us, like that magical night in Moscow [when United won the Champions League]."
Fellow co-chairman Avie Glazer expressed how important the United board felt it was to ensure Ferguson continued working for the club despite his decision to step down as manager.
Archive: Rollercoaster of success
"I am delighted to announce that Alex has agreed to stay with the club as a director," he said. "His contributions to Manchester United over the last 26 years have been extraordinary and, like all United fans, I want him to be a part of its future."
David Gill revealed Ferguson had been planning to make his succession easier by putting in place a young squad and a state of the art training facility at Carrington.
He said: "I've had the tremendous pleasure of working very closely with Alex for 16 unforgettable years - through the treble, the double, countless trophy wins and numerous signings.
"We knew that his retirement would come one day and we both have been planning for it by ensuring the quality of the squad and club structures are in first class condition.
"Alex's vision, energy and ability have built teams - both on and off the pitch - that his successor can count on as among the best and most loyal in world sport.
"The way he cares for this club, his staff and for the football family in general is something that I admire. It is a side to him that is often hidden from public view but it is something that I have been privileged to witness in the last 16 years.
"What he has done for this club and for the game in general will never be forgotten. It has been the greatest experience of my working life being alongside Alex and a great honour to be able to call him a friend."
Current Blackpool manager Paul Ince won two league titles, two FA Cups, a European Cup Winners' Cup medal and a League Cup during his time playing for Ferguson at United.
He told Sky Sports News: "I'm totally shocked. What he's done is unbelievable. You'll never see anyone of his kind again.
"Two weeks ago he was talking about staying on for another two years, so it's a massive, massive shock.
"The way he treated me was like a son."
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