The 32-year-old Spaniard, who won the French Open in 2003, confirmed that the tournament, which runs between from October 20-28, will be his last.
Ferrero turned professional in 1998 and has won 16 career titles, including Masters events in Madrid, Monte Carlo and Rome, and has achieved world number one status but has now slipped to 111 in the ATP rankings.
As well as winning the French Open, Ferrero was runner-up to Andy Roddick in the US Open final in the same year, having lost out to Albert Costa at Roland Garros the year earlier.
Announcing his retirement, Ferrero told www.valenciaopen500.com: "The Valencia Open 500 will be my final tournament, in the best possible scenario.
"This season injuries have prevented me from playing with regularity and it was a tough year as I realised on the court that I did not have the same ambition after 14 years at the top level.
"I am starting a new phase in my life with tremendous excitement, I will continue to be involved with tennis through the Valencia Open, the academy, the foundation that carries my name and other projects."
Ferrero won his final title in Stuttgart last year and has also played in 17 Davis Cup ties for Spain.
The player, who has been nicknamed 'The Mosquito' due to his speed and slight build, also helped Spain to their first Davis Cup win in 2000 and subsequent victories in 2004 and 2009.
He said: "Among the memories I would pick out the Davis Cup win in 2000, because I understood afterwards how much it meant to the country.
"But certainly for a player, winning a grand slam or getting to number one in the world is the most important.
"What I will miss most is the competition, it will difficult to fill the void."