The 36-year-old center announced her decision Wednesday, accompanied by her 19-month-old daughter and husband.
Leslie, a cornerstone of the league since its start in 1997, guided the Sparks to WNBA championships in 2001 and 2002.
"I'm not going to pull a (Michael) Jordan and come back in a year or two," she said. "For me, I feel good about where I am. ... I just know this is a good time. I can still help (the team). I don't want to be out there when I can't do it."
Leslie said she considered retiring last season when it became more difficult to balance her family life and her basketball career. She took the 2007 season off to give birth to her first child, Lauren, and returned last season. She is married to Michael Lockwood.
Her teammates and Sparks coach Michael Cooper persuaded her to play one season so fans could give her a proper send-off.
"This year I have another opportunity to put more of 100 percent into my job one last time," Leslie said. "It's really difficult balancing the team and family.
"I love being a wife, I enjoy my husband and our time. I love being a mom. I'm really passionate about raising a child and being there for her. For me, I just see it's really hard to give 100 percent to everything."
Since the WNBA began in 1997, Leslie has been one of the league's highest-profile and well-liked players.
"Not only do the Sparks owe her an enormous amount of gratitude, the WNBA owes so much to Lisa Leslie, who was part of starting the league," Sparks co-owner Carla Christofferson said. "Without Lisa Leslie, the WNBA wouldn't be what it is. There's nothing any of us who love the sport can say to thank her for that."
Cooper described the player he nicknamed "Smooth" as a combination of Kareem Abdul-Jabbar, Wilt Chamberlain and Bill Russell. Leslie is the WNBA's career scoring and rebounding leader and a two-time defensive player of the year.
"There's a lot of basketball players who have had an impact on the league, but the way she's done it (sets her apart)," Cooper said. "She's never been about individual accolades. She's spectacular in every way you could describe her."
After retiring, Leslie doesn't plan to coach but will keep holding camps for kids.
"I love the opportunity of being a role model," she said. "Ever since I was 7 years old, I would write my name all over the house in hopes of giving out autographs and inspiring people. That's something I really enjoy."
While the Sparks will have Leslie for one more season, they'll open play in June without league MVP and rookie of the year Candace Parker, who is expecting her first child in May. She averaged 18.5 points and 9.5 rebounds in her debut season.