A person familiar with the decision told The Associated Press on Saturday that the five-time all-star catcher will announce his retirement this month.
The person spoke on condition of anonymity because the decision has not yet been made public. Posada's plans were first reported by sports radio station WFAN.
The 40-year-old Posada won five World Series titles with the team that drafted him in the 24th round of the 1990 draft. He became a free agent after a trying season in New York, the final year of a four-year, US$52 million contract.
Earlier this off-season, Posada acknowledged that his career with the Yankees was over, but said he had offers from several other teams.
Posada's retirement leaves shortstop Derek Jeter and closer Mariano Rivera as the two remaining players from the core group that led the Yankees to four World Series championships from 1996-2000 and one more in '09. Andy Pettitte retired after the 2010 season.
Only Bill Dickey and Yogi Berra have caught more games in pinstripes than Posada (1,574).
But Posada lost his catching job before the start of last season and struggled early in his new role as the designated hitter. The switch-hitter was batting .165 against left-handers on May 14 when he was dropped to No. 9 in the batting order and asked out of the game against Boston.
He finished batting a career-low .235 with 14 homers and 44 RBIs in 115 games, playing sporadically in September after top prospect Jesus Montero was called up. Posada did have the winning hit — a pinch-hit, two-run single — against Tampa Bay on Sept. 21, clinching the AL East for New York.
Posada then hit .429 in the five-game division series loss against Detroit, receiving several long ovations and chants of "Jor-ge! Jor-ge!" at Yankee Stadium.
For his career Posada hit .273 with 275 home runs and 1,065 RBIs, winning the Silver Slugger Award five times as best hitting catcher in the American League.