Lee told a news conference in Seoul on Monday that while he wished he could continue playing the time was right to call it a day. Lee retires having earned 132 caps and representing Korea at four World Cups.
At club level he won four K-League titles and the Asian Champions League with Suwon Samsung and was named the Korean league's player of the year in 2008.
"My body will leave the football pitch, but my heart will always be there," the 39-year-old said. "And it's all thanks to the love and support of my fans that I've been able to accomplish things that I did during my career."
Lee, dubbed 'Spider Hands' in Korea, was a supreme shot stopper and excelled in penalty shootouts.
In 2002 he broke Spanish hearts with a series of sublime saves to keep Korea in the game, then blocked Joaquin's penalty in the shootout to help South Korea become the first Asian side to reach the semi-finals of a World Cup.
That stunning run to the last four in 2002 on home soil, when millions of Koreans packed city squares and streets to watch their team beat the likes Portugal, Italy and Spain, was the highlight of the 39-year-old's career.
"The 2002 World Cup brought me the biggest success," Lee recalled. "I will never forget the love from the fans and the camaraderie we had on the team over the seven games at the tournament."
Lee's career almost crumbled in 2007 when he was banned from the national team for a year after taking three team-mates to a bar for a late-night drinking session at the Asian Cup in Jakarta.
After serving his year in exile, Lee returned to the national team and helped South Korea qualify for the 2010 World Cup in South Africa.
His last international appearance was in a 2-1 friendly win over Nigeria in 2010, though he continued to play at club level with Chunnam Dragons until the end of the 2011/12 season.
"I'd be lying if I said I didn't want to keep playing," he said. "But ultimately, I decided it'd be best for myself for the present and the future to call it a career at this point."