Carney has featured in three of England's World Cup matches in France, although she is yet to start heading into the Lionesses' final match.
Phil Neville's side reached the last four of this year's competition, only to be beaten 2-1 by defending champions USA.
And the 31-year-old playmaker, who scored one goal in 14 WSL matches for Chelsea last term, has now confirmed she will be retiring following Saturday's match in Nice.
"I am incredibly proud to have achieved so much in the game but now is definitely the right time to retire," Carney, who won 143 full international caps and scored 32 goals, said in a statement released via the Football Association's official website.
"To have played for England was my ultimate ambition and to do so at four World Cups and represent Team GB at a home Olympics was beyond the wildest dreams I had when first starting out.
"I'd like to thank everyone who has made this all possible, from my family and friends, everyone I have played for and worked with and, of course, the England squad and staff. I owe everything I have to all of them."
She was part of the Gunners side who won an unprecedented quadruple in the 2006-07 season.
England coach Neville said: "Karen deserves all the plaudits that will come her way.
"It's been a privilege to work with her over the past 18 months but even more special has been the chance to get to know someone who is an incredible person and a special team-mate.
"While she will not want a fuss, Karen is someone who deserves total recognition and respect as a true legend of the game."