Mould-breaking: Yves Saint Laurent and model
Mr Saint Laurent confirmed his decision - the subject of frenzied rumours in the fashion world for the past few weeks - at a news conference in the Avenue Marceau headquarters of Yves Saint Laurent Haute Couture.
Mr Saint Laurent did not give a specific reason for his decision to retire, although he said he had been battling ill health and depression for several years.
Mould-breaking
The reclusive designer, who is widely credited with having redefined women's fashion in the 1960s, sold the YSL brand to Gucci in 1999 - and there have been reported recriminations ever since.
The Algerian-born designer became famous with his mould-breaking garments such as the trouser suit and the female dinner jacket.
Admirers say his style epitomised cool chic in the footsteps of another legendary designer, Coco Chanel.
But he had been criticised for failing to keep up with changing trends over the last two decades.
Women liberated
When the YSL brand was sold to Gucci, Mr Saint Laurent and Mr Berge kept control of the fashion house which belongs to French tycoon Francois Pinault, who himself owns Gucci.
Both Mr Saint Laurent and Mr Berge said that no one could ever succeed Mr Saint Laurent in the haute couture side of the business.
But Mr Saint Laurent was reportedly unhappy at
the way Gucci is managing the YSL ready-to-wear business, while
Mr Pinault balked at the large sums in royalties he is obliged to
pay for the use of the name.
Mr Saint Laurent's path to fame began in 1953 when his designs were spotted by Vogue director Michel de Brunhoff.
Five years later his first show as art director at Christian Dior spelled the end of the strait-laced post-war look.
In 1961 he split from Christian Dior and with Mr Berge set up his own fashion house.
But his maverick skill at capturing the mood of the moment continued. The first YSL tuxedo for women surfaced in the 1966 autumn-winter collection and became a fashion landmark.
Danielle Mazinguard of Madame Figaro magazine, told the BBC: "He really liberated women's bodies.
"He made a lot of clothes for women that looked like men's clothes and suddenly women were able to a wear a lot of clothes they could not before."
Controversy
He was still breaking boundaries in 1971 when he posed naked in an advertisement for his perfume of the same name.
An advertisement more recently for another perfume, Opium, was banned in the UK because of its picture of a nude Sophie Dahl.
In 1960 he spent six weeks in hospital after a breakdown during his military service, and for long periods he binged on drink or drugs.
Mr Saint Laurent has also designed stage sets and costumes for the theatre and last year he was made a commander of the Legion of Honour by President Jacques Chirac.