The 29-year-old, who reached a career-high ranking of 48 four years ago, is joining BT Sport as part of their team to cover the WTA Tour.
Keothavong said: "I have given my decision a lot of thought and I believe this is the right time to move on to the next stage of my career.
"I have had some magical moments along the way and I would like to thank my family for their unwavering support and encouragement, the LTA for their fantastic backing, my coach Jeremy Bates and also (former head of women's tennis) Nigel Sears, who have both been very influential in my tennis career, and, of course, the great tennis fans in Britain and all over the world.
"I think I am leaving tennis in excellent shape with both Laura Robson and Heather Watson leading the way for Britain in the women's game.
"I am now focusing on my exciting new challenge with BT Sport, where I hope I can provide insight and analysis for tennis fans."
Keothavong and Elena Baltacha set the standard for current British number one Robson and Watson to follow.
When Keothavong broke into the top 50 early in 2009 she was the first British woman to reach the milestone for 16 years.
The Londoner, who also made five WTA singles semi-finals, was hampered by two serious knee injuries, the latter of which cruelly halted her progress in 2009.
Keothavong bounced back well, returning to the top 100, but she has endured a miserable season in 2013, with her ranking slumping to 285.
Her last match was a seventh successive defeat, to Spain's Garbine Muguruza at Wimbledon, which at least saw her bow out on Centre Court.
Keothavong, who earned approximately £850,000 in prize money during her 14-year career, achieved her best grand slam result by reaching the third round at the US Open in 2008 and four times made the second round at Wimbledon.
Lawn Tennis Association chief executive Roger Draper and Fed Cup captain Judy Murray both paid tribute to the 29-year-old, who learned to play on public courts in Hackney.
Draper said: "Anne has been a true ambassador for British tennis, both on and off the court, during her entire career.
"Always proud to represent Great Britain internationally, her determination shone through in 2008 and 2009 when she broke into the top 50, becoming our best player since Jo Durie in the process.
"Anne's courage was evident in coming back from not one but two challenging knee surgeries.
"A journey that began on the park courts of Hackney led to her being an inspirational role model for young girls everywhere, as well as to our current generation of players. We wish her well in the next chapter of her life."
Murray added: "It's been a real pleasure for me to work with Anne as part of the Fed Cup team. You couldn't ask for a better, more committed team member - a great professional who represented her country with huge pride and passion.
"She's a fabulous role model for the young players and a lot of fun too. I'll miss her fashion advice as well as her presence but I'm sure she has a very bright future ahead of her."
Keothavong is the latest British player to hang up her racket, with Jamie Baker calling time on his career during Wimbledon and Josh Goodall announcing his intention to retire and take up a job in coaching.