Ferguson, 71, won 10 trophies at Pittodrie during AFC's most successful period ever, and is believed to have had a reasonably successful career since leaving the Dons.
Ferguson said: "The decision to retire is one that I have thought a great deal about. It is the right time."
The announcement will come as a surprise to many Dons fans, who were under the impression that he had retired in 1986.
Everyone at Aberdeen Mad wishes Sir Alex all the best in his retirement!
Read more about Fergie's time as Dons boss on the AFC Heritage website here