The former England international initially quit in 2011 to take up a position on United's coaching staff, only to return in January 2012 after admitting he had missed playing.
But the 38-year-old will follow manager Sir Alex Ferguson out of the Old Trafford door at the end of this season.
"Yes I am finally hanging up my boots for good," Scholes said.
"Playing football is all I have ever wanted to do and to have had such a long and successful career at Manchester United, under the greatest manager of all time, has been an honour."
Injuries have hampered the veteran this season but he is set to make his 498th Premier League appearance for United against Swansea on Sunday when Old Trafford's trophy presentation party will double up as a bumper retirement bash, ahead of a final-day trip to West Brom.
Scholes has so far made 716 appearances for the Red Devils and scored the last of his 155 goals against Wigan last September.
"Paul is a truly unbelievable player," said Ferguson.
"He has always been fully committed to this club and it has been a real privilege to work with him for so many years.
"Paul will play at Old Trafford on Sunday against Swansea and will collect an unbelievable but well-deserved 11th Premier League medal."