Youth product Lahm, who has played 501 matches for Bayern since his senior debut in 2002, said that while he could continue playing at the top level to the end of this campaign he would not be able to keep doing it.
"I will end my career at the end of season," Lahm told reporters after Bayern's German Cup last 16 win over VfL Wolfsburg. "I have informed club officials about my decision.
"I can continue with my leadership style, giving my best every day, in every training, until the end of the season. I can keep doing it this season but not beyond," he said.
Lahm is among Germany's most successful players of all time, having won almost every trophy with club and country, including seven Bundesliga titles, the Champions League and the World Cup.
The diminutive defender was one of the world's best fullbacks for the better part of a decade, moving into a midfield role more often in recent seasons.
Lahm, who retired from internationals after Germany's World Cup victory in Brazil, came through Bayern's ranks before spending two seasons on loan at VfB Stuttgart between 2003-2005.
He can still add more silverware to his huge collection this season with Bayern also top of the Bundesliga and facing Arsenal in the Champions League last 16.