The 41-year-old forward and team captain told his teammates in a video posted to social media, stating that this would be his final year.
He said: "This is going to be my last year.
"... It's sad, but it is what it is. We have an unbelievable team this year, and we have 82 games left. Let's make the playoffs and have some fun."
After the announcement, the Capitals named him as part of their first line for their home opener on Wednesday night against the Pittsburgh Penguins.
In a further statement, Ovechkin added: "My family and I decided this summer that this will be my final year in the NHL. I love this game so much, but I know in my heart it’s the right decision.
"It was important for me to make this announcement before our first home game, so I have the chance to thank all the people around the game, everyone who has been so important to me and my family and helped me through good times and tough losses. I wouldn’t have been able to achieve everything I have in my life without them."
Across a career that has spanned more than two decades, the Russian national has scored a record 929 goals and led the side to their first Stanley Cup triumph in 2018.
More to follow.