The former World Cup winner explained: "I wanted to leave football and not let football leave me.
"I had been thinking for years. When you pass a certain age, you know that it can come at any time. This season has reached me more in saying that it is time.
"I am not retiring. I will retire on January 2 when we win the Emperors Cup in Tokyo."
Meanwhile, it's also been confirmed Villa is buying Queensboro in New York, which will become a USL club in 2021.
He will act as an owner together with an investment group, led by Jonathan Krane, CEO of the asset management company KraneShares which already sponsors New Mexico United, of the same competition.