The son of former rider Johnny Schleck and younger brother of Frank cited a knee injury as the deciding factor in his decision, which he announced at a media conference in his home town of Mondorf-les-Bains, Luxembourg.
“I’m obviously disappointed to end my career like this,” Schleck said in a Trek Factory Racing team statement.
“Cycling has been my life for many years and I will need time to figure out what I’d like to do (next). I’m excited to find out what lies ahead.”
Schleck won his yellow jersey after Alberto Contador was stripped of the title for an anti-doping infringement.
The pair eye-balling each other on the Col du Tourmalet through the mist in the decisive stage of the 2010 race was memorable.
So too was Schleck’s third - and final - Tour stage success, when he won on the Col du Galibier after a long solo attack as he went on to finish second to Cadel Evans in the 2011 race.
It was his second runner-up place in the Tour, after a 2009 second, and third in Grand Tours after his second place in the 2007 Giro d’Italia.
Niggling injuries saw Schleck struggle to reach the same heights in the last three years and he abandoned the 2014 Tour before it resumed in France following its UK start.
The knee injury sustained in a crash on the third stage from Cambridge to London was a factor in the end.
“I would have liked to keep on fighting but my knee just doesn’t allow it,” Schleck added.
“Since my crash in the UK there has hardly been any progress. While the ligaments have healed, the damaged cartilage is another story.
“I have been working hard on rehabbing the knee but came to the hard realisation that at the risk of irreversibly injuring it, this is the best course of action.”
Frank Schleck will continue to ride for Trek Factory Racing in 2015 after signing a two-year contract extension.