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The 29-year-old, who triumphed in Melbourne last year, said her retirement had nothing to do with her health and that she wanted to accomplish more in life off the court with her husband David Lee, a professional basketball player.
The Dane had opened up about her battle with rheumatoid arthritis in October last year, saying there were days when she found it hard to get out of bed, but finished the 2018 season as the world number three.
"I've accomplished everything I could ever dream of on the court," Wozniacki wrote on Instagram.
"I've always told myself, when the time comes, that there are things away from tennis that I want to do more, then it's time to be done.
"In recent months, I've realised that there is a lot more in life that I'd like to accomplish off the court.
"Getting married to David was one of those goals and starting a family with him while continuing to travel the world and helping raise awareness about rheumatoid arthritis (project upcoming) are all passions of mine moving forward."
Wozniacki, who was engaged to golfer Rory McIlroy in 2014, has won 30 WTA singles titles and also represented Denmark at three Olympic Games from 2008 to 2016.
She had a barren run this year as she coped with injury problems and was unable to add to her last title triumph at the China Open in 2018.