The 40-year-old has featured for nine teams during a 20-year professional career, including the likes of West Brom, Southampton and Crystal Palace.
Phillips is perhaps best noted for his time at Sunderland, however, where the former England international was the Premier League's top goalscorer in the 1999-2000 season.
He will now hang up his boots following Championship champions Leicester's final game of the campaign against Doncaster Rovers at the King Power Stadium on Saturday.
"After 20 amazing years as a professional footballer, I've decided to announce my retirement," Phillips wrote on his Sky Sports blog.
"I will play my final game for Leicester on Saturday, at our home ground, having won the Championship title - and that seems like the perfect way to bow out."
Phillips has been part of promotion-winning teams at Sunderland, West Brom, Birmingham City and Crystal Palace - for whom he scored the winning penalty in last season's 1-0 play-off victory over Watford, as well as Leicester.
Having featured sparsely for Palace's first-team at the beginning of the campaign, Phillips moved to Leicester where he has scored twice in 10 Championship appearances, helping Nigel Pearson's side to the second-tier title.
He added: "After scoring the winner to get Crystal Palace promoted at the end of last season there were a few voices in the back of my head saying 'maybe I should retire now'.
"But I decided to continue for another season for the chance to play in the Premier League as a 40-year-old.
"I managed to do that earlier in this campaign - joining an exclusive group of three other players who have played in the Premier League as 40-year-olds - but now the time is right."
Phillips revealed that he is considering an offer to remain at Leicester in a coaching capacity, while also looking to extend his work in the British media.
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