The Scot, 71, has won 38 trophies during his reign at Old Trafford and will eventually now become a director and ambassador with the club.
"The decision to retire is person that I have thought a great deal about. It is the appropriate time, " Ferguson said.
Everton's David Moyes may be the bookmakers' favourite to take over, with Jose Mourinho, currently at Real Madrid, as well tipped.
BBC sports editor David Bond says United are generally confident of announcing some sort of successor to Ferguson prior to the weekend.
He believes they need someone who understands the club's history and it is committed to youth development while employing a lovely, attacking style of sports.
While United look designed for his successor, tributes to Ferguson have been led by Prime Minister Jake Cameron, who tweeted: "Sir Alex Ferguson's achievement at #MUFC may be exceptional. "
Former Manchester United and England striker Eric Owen says the Scot's managerial record will "surely never end up eclipsed".
Ferguson, who will undergo hip surgery in the summer, is confident his successor requires over a club in good health after winning their 20th top-flight title seventeen days ago.
"It was crucial to me to leave an organisation in the strongest possible shape and In my opinion I have done so, " he said.
"The quality with this league winning squad, along with the balance of ages within it, bodes well for continued success for the highest level whilst the structure with the youth set-up will be sure that the long-term future within the club remains a smart one. "
Ferguson praised the families he felt helped him or her build the club with a team that had never won a title with regard to 26 years into one of the big in the world.
"I must pay tribute to my children, their love and support may be essential, " he increased. "My wife, Cathy, is the key figure around my career, providing some sort of bedrock of both stableness and encouragement. Words are not enough to express what it's meant to me.
"As designed for my players and workers, past and present, I would really prefer to thank them all in a staggering level of specialist conduct and dedication with which has helped to deliver many memorable triumphs. Without their contribution the of this great club would not be as rich.
"In a early years, the backing of the board, and Sir Bobby Charlton get hold of, gave me the confidence and time to build a football clubhouse, rather than just your football team.
"Over days gone by decade, the Glazer family have provided me while using the platform to manage Manchester United for the best of my ability and Photograph extremely fortunate to been employed by with a talented and trustworthy chief executive in David Gill. I am truly grateful to they all.
"To the fans, thank you so much. The support you have provided in the past has been truly humbling. It really has been an honour and a significant privilege to have had the ability to lead your club and I've got treasured my time for the reason that manager of Manchester United. "
Ferguson is probably the most successful manager in bicycles of the British online game and famously claimed the Premier League, FA Cup and Champions League in 1999.
Co-chairman Joel Glazer highlighted Ferguson's wish to produce winning teams all through his time at United and called the 08 Champions League victory across Chelsea in Moscow a good "magical night".
He said: "Alex has proven again and again what a fantastic manager he is, but he's also an ideal person. His determination to ensure and dedication to the club have been completely truly remarkable.
Fellow co-chairman Avie Glazer conveyed how important the United board felt it was eventually to ensure Ferguson continued employed by the club despite his decision to step lower as manager.
"I am delighted to be able to announce that Alex has allowed us stay with the club for a director, " he said. "His contributions to Manchester United during the last 26 years have become extraordinary and, like all United fans, I want him to join its future. "
Gill, that's also stepping down come early july after 16 years for United, revealed Ferguson has been planning to make your partner's succession easier by spending place a young squad as well as a state-of-the-art training facility in Carrington.
He said: "I've had the massive pleasure of working rather closely with Alex meant for 16 unforgettable years - on the treble, the double, innumerable trophy wins and various signings.
"We knew that this retirement would come one day and we both are generally planning for it by ensuring the quality of the squad and club structures will be in first-class condition.
"Alex's eyesight, energy and ability possess built teams - both on / off the pitch - this his successor can count on as among the best and most loyal in world sport.
"The way he cares for this purpose club, his staff and with the football family in general is an item I admire. It is a side to him which can be often hidden from public view but it surely is something that Photograph privileged to witness in the last 16 years.
"What he has done for this club and with the game in general will not ever be forgotten. It has been the foremost experience of my working life being alongside Alex as well as a great honour to be able to call him a good friend. "
Ferguson began his actively playing career at Queen's Park to be a 16-year-old striker whilst working for being an apprentice tool-worker at Clyde Shipyards.
His noticably spell as a player came inside of a two-year stint at Glasgow Rangers from 1967. He retired being a player in 1974 when he was on Ayr United's ebooks.
He began his managerial career for a 32-year-old at East Stirlingshire previous to moving to St Mirren, where he won his first trophy by removing the Scottish first department title in 1977.
Ferguson's talent at constructing winning teams became obvious after he took at unfashionable Aberdeen and turned them towards a major force in some sort of league where Rangers and additionally Celtic had dominated.
His crowning moment has been winning the European Cup Winners' Cup in 1983 as a result of beating Real Madrid 2-1 inside the final
He also gained three Scottish titles, four Scottish FA Cups your decide one League Cup during their time at Pittodrie and this success saw him get the United job, taking on from Ron Atkinson on 6 November 1986.
Ferguson had managed Scotland in the world Cup in Mexico earlier that year adopting the death of Jock Stein although he was unable to take his country at night group stages.
Current Blackpool office manager Paul Ince won a few league titles, two FA Glasses, a European Cup Winners' Cup medal as well as a League Cup during his time playing for Ferguson at United.
He told Air Sports News: "I'm definitely shocked. What he's conducted is unbelievable. You'll hardly ever see anyone of your partner's kind again.
Ferguson told his people he was stepping all the way down before training today as they definitely prepare for Sunday's match against Swansea. It is the Scot's final home game as manager with the Premier League champions.
First-team discipline Rene Meulensteen said: "He told us just today. He called us with his office and told us buying one he had taken. It looks like he is feeling an awareness of relief in a few ways now. "
He tweeted: "What an act to follow. I guess only Mourinho would have the confidence to strut over the door. If it were me, I'd go designed for Moyes. "
ps 3009 lost what you have been drinking nevertheless it really is soul and 13 games at man utd as compared to shankly's 4. Fergie is far ahead, try to unwind
that Scot"s whisky nose is simply not fit to lick Shanks " booties "!! you heard not shoelace but "lick" Shanks boots - communicate with anyone who isnt american native / pakistani (ie Man u fan) and you should find that ferguson CAN BE A PALE IMITATION OF A HUMAN BEING COMPARED TO MR SHANKLY JESUS REST HIS FOOTBAL LONE
Cue Scousers claiming yet never go to Liverpools community rival while completely ignoring the simple fact he once said he could never visit Chelsea. The threat of unemployment sanctions would be too much for FSW to NOT take into account the Everton job and being he sat unloved and unwanted for 2 years even though he or she was the bestest manager ever with the history of ever, ever™ would possibly be his reason
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