The 66-year-old Piniella, who made five trips to the World Series in his career and has three championship rings, said he was looking forward to spending more time with his family. He didn't rule out consulting for the Cubs or another team, but made it clear he was getting out of the daily grind.
"It's been a wonderful experience," he said. "There's no way that I won't cherish the memories here."
But, he added: "I've been away from home since 1962. That's about 50 years."
General manager Jim Hendry said former Cubs Hall of Famer Ryne Sandberg, now a minor league manager in Des Moines, will be a candidate for the job. He said Piniella's replacement won't be hired before the end of the season.
"It's not going to be a two-week process," said Hendry, who was endorsed for at least one more year by new owner Tom Ricketts.
Sandberg, who spent several seasons as a spring training instructor with the Cubs after retiring in 1997, said he is interested in the job.
"I need to focus on what I'm doing here in Des Moines with these players and what my job is right now," he said. "If the time came, if I was considered for that job in Chicago, I think that's be a terrific thing just to be considered. The whole goal of any minor leaguer is to get to the major leagues, and I think that includes coaches and managers like myself."
One of the Cubs, slugger Derrek Lee, said he was surprised by the timing and that Piniella will be missed.
"He doesn't like to lose," Lee said. "He's had a great career, put a lot of time into this game."
Announcing his retirement now, Piniella said, gives the team time to find a replacement.
"I'm proud of our accomplishments during my time here and this will be a perfect way for me to end my career," he said. "But let me make one thing perfectly clear: our work is far from over. I want to keep the momentum going more than anything else and win as many games as we can to get back in this pennant race."
Entering Tuesday's game against Houston, Piniella's overall record was 1,826-1,691 (.519) and he trails only Tony La Russa, Bobby Cox and Joe Torre in victories among active managers. The Cubs said Piniella will retire as the 14th-winningest manager in major league history.
His record with the Cubs was 307-271, and he is in the fourth and final year of his contract. After leading the Cubs to consecutive NL Central titles in 2007-08, Piniella and his team missed the playoffs last year and have struggled again this season with a new owner in charge. The Cubs have gone 102 years without a World Series title.
A right-handed outfielder, Piniella was the AL Rookie of the Year in 1969 after batting .282, 11 home runs and 68 RBIs with the Royals. He was traded to the Yankees in 1973 and ended his playing career with New York in 1984.
In all, Piniella played 18 years in the majors 11 with the Yankees and was a career .291 hitter.
He began managing in 1986 with the Yankees and lasted three years, including a stint as general manager. He managed the Reds from 1990-92, leading them to a World Series championship in his first season. He also got national attention for a clubhouse wrestling match with reliever Rob Dibble.
Dibble, part of the "Nasty Boys" bullpen, said Piniella "was one of us." He downplayed their 1992 tussle as overblown.
"We butted heads once. It's way more famous than it should be. We've been family ever since," Dibble said. "During batting practice every day, Lou would go to every guy just to see how you were doing not as a player, but as a person. I'll always respect him for that. I always thought that was one of the best qualities about him, that he always cared about you as a person first, a baseball player second.
From Cincinnati it was on to a long run in Seattle, where Piniella's teams won at least 90 games four times. The Mariners went 116-46 in 2001, but lost in the ALCS to the Yankees. His 1995 and 2000 Mariners teams also fell in the league championship series.
"For me, he's obviously a Hall of Fame manager and a great player," said Yankees slugger Alex Rodriguez, who played for Piniella from 1994-2000 in Seattle. "He is a rare breed, a rare combintaion of a guy that played and played in New York, won a championship, and is proven and is tough and is from Florida like me. I just have a lot of love and admiration for Lou.
"Having a disciplinarian like him on a major league team coming out of high school first up to the big leagues was exactly what I needed," Rodriguez said. "I have a lot to be grateful and appreciative for. One thing about Lou was he was a great teacher.
Piniella won 93 games his final season with the Mariners in 2002 before heading home to his native Tampa but questioned the Devil Rays' commitment to winning before they bought out the final year of his four-year contract.
In Chicago, Piniella's arrival was part of a major overhaul that sent expectations soaring after a dismal 2006 season.
Chief executive officer Andy MacPhail resigned after the Cubs won just 66 games, ending a 12-year run that included only two postseason appearances. A day later, the Cubs announced they were not renewing manager Dusty Baker's contract, and Hendry went shopping.
First, he picked out Piniella, who left the TV booth for a three-year contract worth nearly $10 million, with an option for a fourth year. Then, Hendry committed about $300 million for players that included Aramis Ramirez, Alfonso Soriano and Ted Lilly. For all the big moves, the results were awfully familiar at first.
The low point came in a series against Atlanta in early June.
Pitcher Carlos Zambrano got into an altercation with former catcher Michael Barrett, resulting in fines for both players. The next day, Piniella got ejected for a dirt-kicking tirade against umpire Mark Wegner and got suspended.
From there, though, the Cubs turned things around.
They went on a run that led to the playoffs and kept it going the following year, going 97-64 the most wins for the franchise since 1945.
Things have not been as good for Piniella and the Cubs since then. The team missed the playoffs last year and through Monday was 10½ games out of first place in the NL Central and 10 games under .500. Zambrano, the one-time ace, was in the minors after another tirade involving his teammates.
Baker, now the Reds manager, said he was surprised by the timing of the announcement.
"There's a time for us all," he said. "It's hard to keep that pace without having a heart attack."