The alpine skiing legend, 29, took the decision following a crash last week during the downhill finals at Lenzerheide, Switzerland, which also scuppered her chances of winning the overall World Cup crystal globe.
"It's difficult for me, but I think I have made the right decision," said the Garmisch-Partenkirchen native.
"I gave everything this year to obtain my ultimate objective (Olympic gold).
"The most beautiful dream came true again and now it is time to stop." she added.
A two-time world champion and one of the main attractions on the World Cup circuit along with her American rival and friend Lindsey Vonn, Höfl-Riesch won her second super-combined gold medal at the Sochi Games as well as taking silver in the Super-G last month.
After her maiden combined win at the Vancouver Olympics where she also added slalom gold, she leaves the sport with 27 World Cup wins, the 2011 overall World Cup crown and four world championship bronze medals.
She also finished in the top three of the World Cup rankings over the past seven seasons and was heading for a second overall title this year before a crash on March 12 prematurely ended her campaign.
She finished runner-up in the overall standings four times in 2009, 2010, 2013, 2014.
One of the tallest women on the circuit at 1.80 metres, she made her World Cup debut in 2001 at the age of 16 following a glittering junior career that reaped her nine world junior championship medals, including five gold.
The leading light in German skiing over the past decade, her younger sister Susanne is also a World Cup skier. She married her manager Marcus Höfl in April, 2011.