The 34-year-old, who has been a free agent since leaving Bury in the summer, has been struggling to maintain his fitness due to an ankle problem and has decided to quit playing to focus on coaching and scouting.
He made the decision after considering offers to play on the other side of the world.
Healy said: "It has been an absolute honour and privilege to wear the Northern Ireland shirt, to represent the people of our proud wee country and I hope to continue in whatever way I can, in my new career in coaching, to help Northern Ireland succeed.
"I had opportunities possibly abroad, Australia was mentioned. I had an opportunity last summer maybe to go to New Zealand."
Healy began his career at Manchester United and played for a total of 11 clubs, including Preston Leeds, Fulham, Sunderland and Rangers, but it is with Northern Ireland that he will be best remembered.
The striker scored 36 goals in 95 games for his country, almost three times as many goals as his closest rivals Colin Clarke and Billy Gillespie, and only Pat Jennings has played more games for Northern Ireland.
Northern Ireland boss Michael O'Neill said: "David Healy has and will always be an iconic player in the eyes of all Northern Ireland fans.
"His commitment to playing for Northern Ireland is an example to all current and future international players.
"I know that David will have a lot to offer the game as he embarks on his coaching career.
"David has already performed a scouting role for the senior international team and assisted the U17 team as part of his development as a coach.
"I would like to thank David for his contribution to football in Northern Ireland and I look forward to working with him in the future."