Iverson, who has played 14 seasons in the NBA, thought he was close to signing with the New York Knicks last week only to be told team officials had a change of heart.
"I would like to announce my plans to retire from the National Basketball Association," Iverson said in a statement released to Stephen A. Smith, who first announced Iverson's decision on his personal web site. "I always thought that when I left the game, it would be because I couldn't help my team the way that I was accustomed to. However, that is not the case.
"I still have tremendous love for the game, the desire to play, and a whole lot left in my tank. I feel strongly that I can still compete at the highest level."
The question: Will Iverson stay retired?
League sources insist Iverson will still listen if a team is interested in signing him. For now, however, no offer appears imminent.
"I expect him to stay retired if a great, mutual situation doesn't come about," said Iverson's friend and former teammate Eric Snow. "His legacy has been established.
"He is probably one of the biggest trendsetters of our generation post-Jordan. He had that kind of effect on the game. People didn't have the tattoos. What he did, he kind of did it from who he is. He was true to himself. He was true to the game. So his legacy was there.
Iverson signed a one-year, $3 million contract to play for the Memphis Grizzlies this season, but played just three games and complained about his role off the bench. The Grizzlies granted him a leave of absence to attend to some personal matters, but the two sides eventually reached agreement to part ways and Iverson was waived.
“Wonderful career. Right thing to do for his family,” Iverson’s manager, Gary Moore told Yahoo! Sports. “It's no secret that Allen has been unfairly treated through all this. The fact is his family needs him more.”
Iverson, 34, thanked his fans, family and friends and former coaches and teammates in his statement.
"To Michael Jordan, Magic Johnson, Isiah Thomas, Charles Barkley and Larry Bird, you guys gave me the vision to play the game that will be forever in my heart," Iverson said. "To my Mom, who encouraged and inspired me to play every day, and to all of my family and friends who stood by me from the beginning. Thank you!"
The Philadelphia 76ers made Iverson the NBA's No. 1 draft pick in 1996, and he enjoyed his greatest success with the team. He was named the NBA's MVP in 2001 and also took the Sixers to the NBA Finals that season.
“The years in Philly were unforgettable,” Moore said. “He will never forget the crowd. …He'll retire always being known as a Sixer."
The Sixers traded Iverson to the Denver Nuggets on Dec. 19, 2006. He played two seasons with them before they sent him to the Detroit Pistons for Chauncey Billups. Iverson became upset when the Pistons made him come off the bench and later complained he couldn't trust first-year coach Michael Curry. The team sent him home before the playoffs, saying he had an injured back.
"It's tough," Nuggets forward Carmelo Anthony said. "Just a messed-up way to go out like that. Especially knowing you can still play, knowing you still got it."
Iverson is a 10-time All-Star and has won four scoring titles. He ranks 17th on the NBA's all-time scoring list.
Nuggets coach George Karl called the 6-foot Iverson "the greatest little guard to ever play basketball."
Former Boston Celtics point guard Bob Cousy said Iverson's problems from the past two seasons will detract from his legacy in the minds of some people, but he doesn't doubt his Hall of Fame credentials.
"It's in the eye of the beholder," Cousy said. "You always remember what last happened. But he'll be in the Top 10 [scorers].
"He was an outstanding guard. I don't know where he fits in whether he is a point guard or a [shooting] guard. But he was talented as a [scorer]."
During an interview with Yahoo! Sports early this month, Iverson said he could see himself walking away from the NBA.
"I'm not playing basketball no more to make money or anything like that or fame," he said. "I've been there and did that. I just want to be happy doing what I love to do.
"If I felt I had to sell myself or sell out to be somebody that I'm not, then I wouldn't do it anymore. I'd be playing at the YMCA."