The 35-year-old has started just four Premier League games this season after falling behind Daniel Agger and Martin Skrtel in the pecking order at Anfield.
The centre-half has scored four goals in 723 appearances for Liverpool since making his debut in January 1997, winning the Champions League, Uefa Cup, FA Cup twice and League Cup three times during a glittering career.
“This will be my last season at Liverpool and my last as a professional footballer,” Carragher told Liverpool’s website.
“I’m making this announcement now because I don’t want the manager or the club to be answering questions on my future when I’ve already decided what I am going to do.
“I will be fully committed between now and the end of the season to doing the very best for Liverpool Football Club, as I’ve done my entire career since joining aged just nine-years-old.
“It has been a privilege and an honour to represent this great club for as long as I have and I am immensely proud to have done so and thankful for all the support I have had. There are many memories I want to share and people to thank, but now is not the time for that.
“I won’t be making any further comment on this decision until the end of the season; all our focus and concentration should be on achieving the best possible finish in the league this season and trying to win the last remaining trophy we are competing in.”
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