Letterman, 66, has hosted the CBS late night talk show since 1993 and an NBC version of the show that aired after Johnny Carson from 1982-1993. He is the longest-serving late-night host in television history, surpassing Carson's record last year.
Letterman reportedly made the announcement to the audience at Thursday's taping of the show and news of the announcement trickled out via Twitter.
He informed CBS president and CEO Les Moonves of the decision before making the announcement, according to the article.
Letterman's longtime bandleader, Paul Shaffer, will also reportedly retire.
Letterman is also a former resident of New Canaan, Conn.
Click here to follow Daily Voice Eastchester and receive free news updates.