The 35-year-old frontman, who played for Ukraine at Euro 2012, revealed the news late on Friday night in a statement released by his club, Dynamo Kiev.
“This will probably shock everyone,” Shevchenko told the club’s official website.
“My future will no longer be in football. I will give more information tomorrow (today) but I will be going into politics.
“I hope for your support.”
Shevchenko earned his reputation as one of Europe’s most prolific strikers in two successful spells with AC Milan.
During his combined time with the Rossoneri, he scored 175 goals in 322 appearances and helped them lift the UEFA Champions League in 2002-03 and the Serie A title the following season.
His two stints with Milan sandwiched a three-year spell at Chelsea, although he struggled to make his mark at Stamford Bridge.
Shevchenko also won five league trophies with Dynamo having started – and now ended – his career there and is the all-time leading goalscorer with Ukraine’s national team, netting 48 goals in 111 matches.