Having stepped away from the sport after the Tokyo Olympics in 2021, Daley made a return last year at the request of his older son, and his appearance in Paris made him the first British diver to compete at five Olympics.
"It was emotional at the end, up there on the platform, knowing it was going to be my last competitive dive," the 30-year-old Daley told British Vogue.
"But I have to make the decision at some point, and it feels like the right time. It's the right time to call it a day."
Daley, whose popularity grew even more after he came out as gay in 2013, had won the Olympic gold medal in the men's synchronised 10-metre platform event at the Tokyo Games.
"I'm really happy with how everything's gone," an emotional Daley told the BBC.
"It's always hard when you say goodbye to your sport. Lots of things to process, but I think it's the right time. This year felt like such a bonus and I got to compete in front of my family, my kids. I got to be flag-bearer. So yeah, bucket list ticked off on every occasion."
