"It has been some difficult years, these last two especially," Nadal, who won a record 14 French Open titles, said in a video.
"I am very excited that my last tournament will be the Davis Cup representing my country. It's closing the circle because one of my first joys was the final in Sevilla in 2004."
The Davis Cup knockout phase will be played from November 19th-24th.
Nadal's career has been hampered by injuries and he missed the 2023 French Open and was beaten in the first round by German Alexander Zverev this year.
The 'King of Clay' won his last Roland Garros title in 2022 and left Paris on a jaw-dropping 112-4 win-loss record.
Nadal played only 23 matches in the last two seasons.
He will hang up his racket two years after his great rival Roger Federer, leaving 24-time major winner Novak Djokovic of Serbia as the only member of the 'Big Three' still active.
Earlier on Thursday, Nadal's rival in the youngsters' ranks, Frenchman Richard Gasquet, said he would end his career after next year's French Open.
Nadal thanked his family and his team for his stellar career, with a special word for his uncle Toni, who was his coach for most of his time on court.
"I believe that thanks to him, I have also been able to overcome many situations that have been difficult in my sporting career," he said.
To his fans, Nadal said: "I can't thank you enough for what you have made me feel. Everything I have experienced has been a dream come true."
"I leave with the absolute peace of mind having given my best," he added.
After refusing any special event after his French Open first-round loss this year, Nadal said he would be back and he is now expected to receive what promises to be an emotional tribute at Roland Garros next year.
