The former Liverpool defender has been Match of the Day's lead pundit since the start of the Premier League in 1992, and was initially viewed as a innovative voice in football analysis.
However, in recent years after the emergence of first Andy Gray then Gary Neville on Sky, Hansen's punditry appeared increasingly simplistic, a perception not helped by his rumoured £1.5million-a-year salary.
Hansen told The Daily Telegraph, for whom he is a columnist: "I've been in football for 41 years and I'm going out right at the top, just as I did at Liverpool. The plan was always that I would retire at 55. I kept going, but I finally decided to retire during Euro 2012.
"I had just signed a two-year contract and felt that, by the end of it, I would have had enough. But I have worked for a great organisation with wonderful people on the most fantastic programme."
Hansen revealed he turned down a number of opportunities to leave the BBC, for both other broadcasters and for coaching and managerial jobs in football.
"Sky came in for me when Andy Gray nearly left to take the Everton job, almost 20 years ago," Hansen said.
"I was under contract at the BBC, so turned it down, but there were four occasions after that when I had big offers from ITV.
"They came to me in 2006, just before I signed the biggest contract of my life at the BBC, and offered me fortunes. I was absolutely amazed by what they offered me, but I just felt I had been looked after by the BBC.
"I also turned down Manchester City in 1995 after Brian Horton was sacked, simply because I never wanted to be a manager.
"Francis Lee, who was chairman at the time, phoned me up and said he thought I would have fancied it, but while I told him I was flattered, I just said I wasn't interested in managing a football club.
"When I left Liverpool in 1991, I was in the frame for the job at Anfield, but if I wasn't going to take the Liverpool job, I wasn't going to take any job. It was as simple as that.
Hansen defended the criticism of the Match of the Day punditry, telling the Telegraph:
"The viewing figures over the last five years have been absolutely sensational but nobody seems to want to know about that.
"In terms of audience appreciation figures, they are through the roof as well.
"There has definitely been a sea-change, though, because five or six years ago, it was dead. We were still doing the job, but the viewing figures were plummeting.
"I'm not saying they would not have kept it going, but there was certainly concern over the viewing figures.
"But because there was so much live football on television, it suddenly changed as people started going back to highlights and we started to see the kind of viewing figures we hadn't seen for ten years.
"Nobody knew that, though. The thing with the BBC is that there are not a lot of people out there willing to defend it, but the viewing figures speak for themselves.
"Match of the Day is a totally different programme to the live football broadcasts and the real strength of it - and also its biggest weakness - is that every second is accounted for before you start.
"The first game, you get 3½ minutes to analyse it, the second game you may get two minutes, but afterwards you get 30 seconds down to 10, so after that it is all sound bites. If you are asking for insight in 10 seconds, then you have to be a better man than me!
"You could have the Manchester derby, Liverpool versus Manchester United or whatever, but 3½ minutes is 3½ minutes. You are not going to get eight minutes. It just isn't going to happen.
"But I've worked with arguably two of the best in Gary [Lineker] and Desmond Lynam. Des was the best, and is the best, because he was just an unbelievable presenter."
Hansen's retirement comes after the BBC announced fellow Match of the Day stalwart Mark Lawrenson would be taking a 'reduced role' on the show.
He is a lazy lazy man. Rocks up at each international tournament every 2 years knowing ONLY the really famous footballers. If they aren't Zidane he hasn't heard of them or ever seen them play......not good enough for all that money- kneejerk1