The 35-year-old, who this season represented Malaga in La Liga, has decided to end his career and made his announcement in a press conference on Monday.
Van Nistelrooy said: "Yesterday was my final game as a professional footballer. I wanted to play in the Champions League, but it is the moment to leave. I have arrived at my physical limit and I can't play at the maximum level. I couldn't have had a better send-off than this."
He added: "I feel happy that I am the one taking this decision. I would like to thank Malaga, the technical and medical staff for an unforgettable year.
"I am proud to have won collective and individual titles, but my greatest satisfaction was to be able to work day after day, year after year."
Van Nistelrooy scored only four goals in 28 league appearances for Malaga this season as the club secured Champions League qualification for the first time in their history.
The striker will be best remembered for his time in the Premier League with United as he scored 95 goals in 150 league games between 2001 and 2006 following a £19 million move from PSV Eindhoven.
He had started his career with Den Bosch before spending one season at Heerenveen and earning a move to PSV in August 1998.
United had to delay their initial purchase of Van Nistelrooy by a season after he suffered a serious knee injury in 2000 but the Dutchman won the Premier League title in 2003, the FA Cup in 2004 and the League Cup in 2006.
However, he was an unused substitute in the League Cup final win over Wigan Athletic and subsequently left United that summer having fallen out with Sir Alex Ferguson.
The striker joined Real Madrid, winning Liga titles in 2007 and 2008, and also spent a spell with Hamburg in the Bundesliga before securing a move to Malaga last summer.
He won 70 caps for Netherlands, scoring 35 goals, and represented his country at the 2006 World Cup as well as the European Championships of 2004 and 2008.