"The Open and St Andrews will forever hold a significant place in my heart," the 57-year-old Briton said in a news release on Monday.
"My fondest moments on my journey with this great sport are woven with pictures and emotions in this setting. It all means a huge amount to me.
"I look forward to celebrating all that golf has given me as I cross that storied (Swilcan) bridge and the wonderful memories I share with many people. I am grateful for it all and grateful to golf."
Faldo won the Open at St Andrews in 1990 and at Muirfield in 1987 and 1992. He also landed a hat-trick of U.S. Masters titles in 1989, 1990 and 1996.
The Englishman, who will turn 58 during this year's Open, joins American Tom Watson, a five-times champion, in bowing out of golf's oldest major from July 16-19.
"Nick Faldo is an inspirational figure in British golf and has enjoyed a remarkable career in the Open," said Peter Dawson, chief executive of championship organisers the Royal and Ancient.
"He has delighted the galleries over many years with his three victories and consistently outstanding performances.
"I'm sure there will be great anticipation among the galleries at St Andrews to see him play in the Open once again and he will receive a rousing ovation worthy of a great champion."
(Editing by Ed Osmond)
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