The 26-year-old took a year off from competition after the Sochi Olympics before resuming training in 2015, but said on her blog late on Monday that this time she was quitting for good.
"After coming back to competition, I have not been able to achieve either the techniques or the results I wanted, and the number of things I worried about increased," wrote Asada, known in Japan by the affectionate nickname "Mao-chan."
"After last year's Japan nationals, all the goals that had kept me going disappeared, along with my will to compete."
Plagued by knee pain this past season, Asada finished 12th at the national championship in December, the lowest finish of her career. She had previously won the event six times.
Asada began skating at the age of five, lured into the sport by her older sister Mai, and began to draw attention while still a junior, sharing the limelight with South Korea's Kim Yuna at the start of a long rivalry.
This climaxed at the 2010 Games, when Asada had to settle for silver while Kim claimed gold.
The only woman to land the complicated triple Axel jump three times in competition, Asada was tipped as a leading medal contender at the 2014 Sochi Olympics but had a disastrous short programme, although she rebounded with a strong free skate to finish sixth overall.
She won her third world championships title a month later, setting a world record with the same short programme that had been her undoing at Sochi, but wrote that she did not regret either taking a one-year break or coming back for another go.
"I have no regrets about my skating career," she added.
"This was a huge decision for me, but I regard it as only one stage of my life and will find new dreams and goals going forward."
The announcement was met with surprise in Japan, where Asada is a household name and has appeared in a range of advertisements from chocolate to cold medicines.
Even the staid Japanese government joined in, with chief cabinet secretary Yoshihide Suga telling a news conference: "I am very surprised and think that it's too bad."
Others appreciated her dedication to figure skating and delivering so many eye-catching routines.
"She has worked so hard and shown us many great performances," said Tokyo resident Noriko Yamaguchi. "So I just want to thank her."
(Additional reporting by Teppei Kasai and Minami Funakoshi; Editing by Peter Rutherford)
