Merrett told his teammates of his decision on Tuesday afternoon.
The 31-year-old was originally drafted as a forward in 2002, before establishing himself as a mainstay in the Lions’ defence for the best part of a decade.
He will play his 200th game in Round 23 against St Kilda after 14 AFL seasons in what will be his final match.
“I can’t really talk, but I suppose you know what I’m going to say,” an emotional Merrett said when telling players and staff.
“I thought I wanted to play on next year, I thought if you’re able to play, if you’re capable – keep going. But, I probably sat down on the weekend and thought, what do I value in life the most? And that’s my family.
“I just want to give more time to my family and it probably feels like a little bit of the fire has burnt out inside. The one thing that has kept me going is the knowledge I can share with the younger guys, particularly the defenders. It’s one of the main reasons I play.
“I can see the future is so bright.
“For the last 12 years I’ve been playing seniors we haven’t had a whole deal of success. It’s been pretty tough but I wouldn’t give it up for anything.”
Merrett made his debut in Round 2, 2005, after being selected with pick No. 30 in the 2002 National Draft.