The 31-year-old centre-back is widely regarded as one of England's finest defenders since the turn of the millennium but has endured a career plagued by injuries.
King lifted the League Cup in 2008 and helped Spurs achieve Champions League qualification for the first time in their history in the 2009-10 season.
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"I have been here since I was a boy, I have always considered it my club and have always found it hard to imagine wearing the shirt of another team," Ledley told Tottenham's official website.
"I know that being a one-club man is a rarity these days, but I have always enjoyed being part of the set-up here and the challenge of putting this club up with the elite where it should be.
"I would like to say thank you to everyone at the club and to the fans. I have missed a lot of football over the years, but the Spurs fans have always been patient and incredibly supportive with me during difficult periods.
"Sadly my injuries and inability to train have now finally brought an end to my career."
Chairman Daniel Levy paid tribute to the impact King has made at White Hart Lane and announced that he would continue in a role behind the scenes.
"Ledley has made a magnificent contribution to this club - as a wonderful player, captain and ambassador," Levy said.
"It has been well documented how he has battled against injury over the years and it is testament to the character of the man how he managed to sustain such high standards of performance on the pitch, while providing such fine leadership.
"It is in an ambassadorial capacity that Ledley will continue, playing a crucial role in supporting the club's work in the community and the ongoing regeneration of the Tottenham area, whilst also being a hugely positive role model for our younger players."
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"I pleased that I can continue to work within the club and for the local community, especially after the devastation caused by the riots last year," he added."I am already heavily involved with the work of Spurs Foundation and the new stadium scheme will be a major factor in the regeneration of the area, so I am delighted that I shall be part of that."
Spurs have also announced that they will hold a testimonial for King at White Hart Lane towards the end of the 2012-13 season.