Posada was one of the cogs that helped the storied franchise to its most recent run of five World Series championships since 1996.
The 40-year-old native of Puerto Rico made his big league debut with New York in 1995 and became a regular part of the lineup in 1998 when the Yankees won the first of three straight World Series titles. He was also the catcher for New York's 2009 championship.
"Every time I stepped through the Yankees Stadium doors I quoted Joe DiMaggio, 'I want to thank the good Lord for making me a Yankee,'" Posada said during his news conference Tuesday at Yankee Stadium.
"I was able to live my dream to play baseball for the best sports franchise... the New York Yankees," Posada added in his opening comments. "Playing for the New York Yankees has been an honor. I could never play for another team. I will forever be a Yankee."
Posada became emotional while thanking his family, teammates, coaches, front office personnel and fans.
"Hopefully, you won't miss me that much," he said with a nod toward longtime teammate Derek Jeter, who was among those in attendance. Mariano Rivera and CC Sabathia were also seated in the audience, along with former teammate and manager Joe Girardi and Yankees general manager Brian Cashman.
Posada was a five-time All-Star during his career, in which he batted .273 in 1,829 games with 275 homers and 1,065 runs batted in.
However, he was relegated to designated hitter duties in 2011 and struggled in that role. He hit just .235 with 14 homers and 44 runs batted in.
In May, Posada asked out of the lineup before a game against the Boston Red Sox when Girardi dropped him to ninth in the batting order. He apologized the next day.
Selected by the Yankees in the 24th round of the 1990 draft as an infielder, Posada made the switch to catcher in the minors and is among the top 15 in franchise history in numerous offensive categories. He is eighth in games and home runs, seventh in doubles with 379, 11th in RBI and 14th in hits with 1,664.
Posada appeared in 125 career postseason games and batted .248 with 11 homers and 42 runs batted in. He was the team's top hitter during the 2011 ALDS against Detroit, batting .429 with six hits in 14 at-bats.
Only Hall of Famers Bill Dickey (1,708) and Yogi Berra (1,695) have caught more games for the Yankees than the 1,574 by Posada, who also matched Hall of Famer Johnny Bench's mark of catching at least one game in 17 consecutive seasons with the same team.
Posada also joined Bench, Gary Carter, Carlton Fisk and Ivan Rodriguez as the only players to record at least 1,500 hits, 350 doubles, 275 homers and 1,000 RBI while playing at least half of his games as a catcher.