Neville has told friends he does not want to play for another club and would like to take on a coaching role at Old Trafford after he ends his 19-year playing career in the summer.
The 35-year-old has made just four first-team appearances this season and struggled badly last weekend, when he was lucky to escape a red card against West Bromwich Albion as he looked desperately off the pace.
Neville feels his body is giving up on him and would rather retire as a one-club man and a United great than finish his career elsewhere with his best days well behind him.
One option for the right-back is to take over the United reserve team in a similar way to Ole Gunnar Solskjaer, who has just taken the hotseat at Norwegian side Molde after two-and-a-half years on the coaching staff at Old Trafford.
Red Nev | Gary Neville has decided to call time on his trophy-laden career and wants to coach
Neville's decision marks the end of an era at the club, with goalkeeper Edwin Van der Sar also set to retire at the end of the season. Ryan Giggs and Paul Scholes are both on one-year deals that expire in the summer but could continue for another year.
Neville has played 602 games for United since making his debut in 1992 and is fifth on the club's all-time appearance list. Although never blessed with outstanding ability of some of his contemporaries, he has always been appreciated by United fans for his consistency and commitment.
He came through in a famous United youth team alongside the likes of Paul Scholes, Nicky Butt and David Beckham before becoming a regular in the 1994-95 season.
Neville has won eight Premier League titles during his Red Devils career and was a key part of the side that won the Champions League in 1999. He was also capped 85 times for England and was first choice right-back for a decade after making his international debut in June 1995.