The three-times US national road champion, a winner of four Tour stages, will contest the world-famous stage race in June and July then the USA Pro Cycling Challenge in August before bringing down the curtain on a 19-year career.
"This is definitely not a decision that has been easy," Hincapie, 38, said. "I came to the conclusion that I want to go out while I can still contribute and make a difference.
“To be able to compete for 19 years as a professional cyclist has been something I would have never dreamed of doing. But at the same time, it's also going to be good to spend more time with my kids, who are getting to be the age where they miss me when I'm gone."
Hincapie said he still hopes to play a pivotal role in his swansong Tour, having
played an integral role in helping team-mates like Cadel Evans (third at the Critérium du Dauphiné) and Alessandro Ballan (third at Paris-Roubaix and the Tour of Flanders) to success recently.
“I'm still feeling strong and healthy and ready to make a contribution to the team these last two months,” he added. “I'm 100 per cent motivated to help Cadel win another Tour."
Evans, the defending Tour champion, said he was saddened to hear the news.
"I'm hoping that he'll change his mind, probably like many other cycling fans around the world will do when they hear the news," Evans said.
“George is incredible. He's the core of the BMC Racing Team and not just on the road as a captain, but also in the structure of the team. He's a part of so many aspects of everything we do because of his tremendous leadership.
"It's a dream at this point [to end his career with an Evans Tour win], but it's a dream that I'd like to deliver to George to thank him for all the sacrifices he's made for me over the past few years."
BMC Racing Team President Jim Ochowicz said Hincapie has cemented his legacy in the sport.
"George was the first big rider to believe in the BMC Racing Team," Ochowicz said. "He's led us through the past three years of the classics and grand tour seasons as both a leader and a team-mate.
“I am very proud that he was able to start as a professional with me on the Motorola team in 1994 and that I'm still with him at the end of his career. It's been an honor to bookend the career of one of the nicest people and one of the greatest cyclists America has ever produced."
Hincapie is a five-times Olympian (1992, 1996, 2000, 2004, 2008) and will set a new record with a 17th participation in the Tour this year.
He shares the record of 16 Tour starts – he has 15 finishes - with Dutchman Joop Zoetemelk; he has helped a team-mnate to win the three-week race a record nine times.