Ballack, who won 98 caps for Germany and led them to the 2002 World Cup final and Euro 2008 final, played for clubs including Chelsea, Bayern Munich, Bayer Leverkusen and Kaiserslautern.
"I want to say goodbye in an honourable way to colleagues and fans and to thank those people who developed me, supported me and challenged me in my career," said the former midfielder, who retired last year after returning to Leverkusen in 2010.
"Leipzig is great and my roots are in Saxony. It is where I learned my football ABC," he said in a statement.
Ballack, who started his career at Chemnitzer FC, won a string of domestic club trophies in Germany and England but failed to claim a major European or world title despite coming close on several occasions.
A proposed final Germany appearance last year was turned down by Ballack, angry with federation officials and coach Joachim Loew with the way his international career ended after injury ruled him out of the 2010 World Cup.