Hoy had been contemplating his future ever since he added team sprint and Keirin golds at London 2012 to his four winners’ medals from Athens 2004 and Beijing 2008.
The 2008 Sports Personality of the Year appeared to be tempted to compete at the 2014 Commonwealth Games, being held in his native Scotland, at the velodrome named in his honour.
But Hoy, who will be 38 by the time the Glasgow Commonwealths roll around, said at a press conference in his home city of Edinburgh that he is indeed retiring.
"I am officially announcing my retirement. It was not a decision I took easily or lightly, but I know it's the right decision," Hoy said.
"Nothing would give me more pleasure than going to Glasgow, but I don't want to be there for the numbers. Being objective, I got every last drop out in London. Now it's time for younger riders to experience what it is like to compete in front of a home crowd.
"To try and go for another year would be too much, one year too far for me. I'd rather step aside and let someone else have their opportunity.
"I don't want this to be a sad moment. There's always a temptation of going on too long but you can tell when you're good, but not good enough."
The multiple-time world champion in a variety of track events has long been preparing for life after the sport, announcing late in 2012 he would be releasing a brand of bicycles in his name.
He leaves a legacy as the leading cyclist during Team GB's spell of near total dominance in the sport over recent years.
Hoy won silver in the team sprint in the 2000 Games in Sydney along with Jason Queally and Craig Maclean but graduated to gold in Athens four years later when triumphing in the 1km track time trial
In Beijing he took three golds - in the team sprint, the Keirin and the sprint - to become the most successful British competitor at a single Games in any sport for 100 years, and two more golds followed in London as he secured his status as Britain's greatest ever Olympian.
Lord Coe led the tributes on Thursday, hailing Hoy as an Olympic icon.
“Throughout his remarkable career, Sir Chris Hoy has exemplified the values that define an Olympic champion," said Lord Coe.
"His pursuit of excellence has been tireless. His respect for opponents, and commitment to clean competition, has been unwavering.
"And his dignity in victory has set an example that generations of Team GB athletes will strive to emulate. Chris is an icon and he has earned a revered place among our nation’s greatest sporting heroes.
"His gold medal triumphs this past summer in London are two of the defining moments of the Games, and were a source of pride and inspiration for millions throughout our country.
"We are grateful that Chris has chosen to continue his association with the British Olympic Association by serving as a Glasgow 2018 Champion in its bid to host the Youth Olympic Games.
"As he transitions now from his unparalleled competitive career and takes on a series of new and different challenges, we wish Sir Chris the very best for continued success, and we thank him for his commitment to Team GB and the Olympic Movement.”
Sir Dave Brailsford also praised Hoy's contribution to British cycling - claiming his dedication to Olympic success was 'second to none'.
British Cycling's performance director has seen first-hand the hours of effort that Hoy has put into his career, during energy sapping training sessions at the velodrome in Manchester.
And he believes his legacy is secure, with the likes of fellow Olympic champions Jason Kenny and Laura Trott both crediting Hoy with inspiring their careers.
“I can’t speak highly enough of Chris and his career," said Brailsford.
"On a personal note I will never forget his kilo in Athens – it was one of the most epic Olympic moments that I’ve ever experienced, the tension in the build-up was unreal.
"His application, athleticism and dedication are second to none and I’ve said it many times but he is a true Olympic champion who embodies all of the Olympic values.
"Chris is always welcome to come back to the velodrome and share his experiences and wisdom with the next generation of cyclists, and I wish him the best of luck in his retirement.”
Hoy's success also inspired thousands of people to get on bikes, according to British Cycling president Brian Cookson.
“The impact that Sir Chris Hoy has had on our sport since he won his first gold medal in Athens in 2004 is unparalleled," he said.
"It goes without saying that not only is Chris an absolutely phenomenal athlete, but he is also an exceptional individual. The fact that he’s acquired six gold medals and is Britain’s most successful ever Olympian is testament to this.
"But Chris has done so much more for cycling – he was one of the first track riders to propel cycling into the mainstream back in 2008, bringing track cycling to new audiences and inspiring thousands of people to get on their bikes.
“Chris has always been a fantastic role model – his professionalism, passion for the sport and his determination to succeed at the highest level is central to the Great Britain cycling team ethos and is something that he has helped to foster amongst his colleagues as they look ahead to Rio."
- Sports & Recreation
- Sir Chris Hoy