The 33-year-old American, addressing a news conference, said: "I have thought a lot about it, I have gone back and forth.
"The biggest inspiration in my life now and the biggest inspiration in this decision is my children. They're the ones that make it easier to suffer but they're also the ones that have told me it's time to come home.
"So without them none of this would be possible.
"Ultimately, athletes have to retire. I have been doing this for 14 years, I have been a professional athlete for almost 20 years. The body does not just keep going and going and going."
Armstrong, who rides for the Discovery Channel team and who came back from being diagnosed with cancer in 1996 to win a record six Tour de France titles between 1999 and 2004, added: "My time has come, there are many many other things I need to do in life but I will definitely have the itch every now and again.
"After July 24, (continuing) is not an option. It's a great field, a great race, I would like to win again. I would love to go out on top."
Four men -- Jacques Anquetil, Eddy Merckx, Bernard Hinault and Miguel Indurain -- won the event five times.
Armstrong, who split with his wife in 2003 and is now in a relationship with singer Sheryl Crow, said he wanted to help groom a successor within the Discovery team.
"If I step off the bike it does not mean I'm not involved in the team. I want to develop another American Tour de France winner."
His immediate priority, however, was to cap his career with a final glorious chapter.
"This is going to be a different year for the Tour de France. I am one year older, and one I always considered a main rival, Jan Ullrich, he looks to be much better than he has ever been this time of year.
"While it is an older man's race, it's not an old man's race."
Asked what made him put up with the suffering of the Tour one more time, he added: "Because of that dream to go out on top.
