The 68-year-old, who will be replaced by former Barcelona coach Pep Guardiola in an appointment announced by Bayern in January, won the Champions League last month as well as the Bundesliga and Cup double for an unprecedented treble by a German club.
"I am still impressed with the events," a tearful Heynckes, who took over for the third time in 2011, told reporters.
"From July 1 I will not take over any club here or abroad. I will recover, think about what has happened in the past weeks and months.
"The last two years were intense and outstanding," said Heynckes, whose career as a coach and player stretches back to 1963, adding his team had learned a lot after just missing out on three titles last season.
"I had told my wife after last year's Champions League final defeat that I would complete my contract at Bayern but not go beyond that."
Heynckes led Bayern to two consecutive Champions League finals, losing to Chelsea on penalties in Munich last year but bouncing back to beat Borussia Dortmund 2-1 with a last-gasp winner at London's Wembley stadium on May 25.
"This season I reached my limit. In the past weeks I realised I had reached an age where recovery takes a lot longer," said Heynckes, who also coached the Bavarians some 25 years ago as well as briefly in 2009.
"Coaching Bayern demands a lot of substance, strength and energy."
Heynckes, still the Bundesliga's third best scorer of all time, won successive league titles in 1989 and 1990 during his first spell at Bayern.
Flanked by club boss Uli Hoeness and chief executive Karl-Heinz Rummenigge, who heaped praise on the 1974 World Cup winner with a large banner behind them that read "Thank You Jupp", Heynckes said he needed time to reflect.
The former Borussia Moenchengladbach striker, who as a player was also European champion with West Germany in 1972, had been linked in the media with a possible move back to Real Madrid following the departure of Jose Mourinho.
The German, who led Real to the European crown in 1998, ruled out a permanent retirement, although he did say he was looking forward to time away from the sport.
"I personally am not in favour of final decisions but I told you before I am 68 and there is life outside the job," he said.
"I was a passionate coach, always wanted to work with my teams, went to training every morning with a strong desire. But now I want to enjoy my life."
Hoeness, Heynckes's close friend who lured him out of retirement in 2009 to help Bayern clinch a Champions League spot after the sacking of Juergen Klinsmann, said the Bayern door in another capacity would always be open for him.
"A friend is leaving Munich but the friendship has not ended," Hoeness said. "It has become even deeper."