Mr. Ferguson, whose long tenure and trophy haul will probably never be repeated, will take charge of just two more games this season before he moves on to a boardroom position.
The unexpected decision has sent shockwaves through British and world soccer, or football, and the news even eclipsed the State Opening of Parliament on domestic television.
Glasgow-born Ferguson has won a total of 38 English trophies during his reign at United, including an unprecedented ‘treble’ in 1999 when his Red Devils won the domestic Premiership league, FA Cup, and European Champions League.
His sometimes charming but gruff character has divided football supporters and commentators, with him carefully creating a "them and us" mentality among his squad. He has never been shy at dealing with troublesome players, crossing swords, and transfer-listing big names such as David Beckham and Dutchman Jaap Stam.
Knighted in 1999, Ferguson - often referred to as Sir Alex – has also seen changes in ownership at Old Trafford, Manchester United’s home stadium. This includes the Florida-based Glazer family's controversial takeover in 2005, which saddled the Manchester United club with huge debt.
In a statement today, he said: “The decision to retire is one that I have thought a great deal about and one that I have not taken lightly. It is the right time. It was important to me to leave an organisation in the strongest possible shape and I believe I have done so.”
Ferguson, who is due to have a hip operation in the summer, also won 11 honors at two Scottish clubs and helped Manchester United become one of the biggest supported clubs in world football, with an estimated fan-base of 660 million and a market value of $3.17 billion according to Forbes.
Football writer and author Anthony Clavane said Ferguson’s working class Scottish upbringing influenced his managerial style. “He embraced the technical, European style of management with the motivational, old-fashioned British way. But his emphasis has always been the team before the individual and he’s never allowed a player to become more important than that," Mr. Clavane says.
“It’s a very socialist mentality and probably goes back to when he was growing up in Glasgow. The collective is more important than the individual, doesn’t matter how flashy they are.”
David Lacey, a football writer for Britain’s Guardian newspaper, says Ferguson has been a hugely influential figure in the soccer world. “We thought he’d go on forever and not to have him there will be strange.
"His managership has straddled two big changes in football – the creation of the Premier League and the influx of big money, and the Bosman Ruling on player contracts which saw large numbers of foreign players come to England,” Mr. Lacey told The Christian Science Monitor.
However for United fans, such as public relations expert Debbie Manley in Manchester – who is the fourth generation of her family to support the team –today carries a mixture of emotions.
“It’s always been talked about at Old Trafford but it’s still a bit of a surprise when [the announcement] was made. He’s achieved everything he set out to achieve including knocking Liverpool off their perch.
“There’ll be a period of uncertainty and I just hope the new manager is given the time to bed in and build a team,” the way "Fergie" was, Ms. Manley says.