The 33-year-old won eight trophies for the Reds, with all but one of those coming as captain.
An emotional farewell from the Reds to the skipper ❤️ pic.twitter.com/F8yBeC7iQW— Liverpool FC (@LFC) July 27, 2023
Liverpool manager Jurgen Klopp has paid tribute to the midfielder.
"I know it was a really, really tough decision for Hendo and I was around or with him all the way," Klopp told the Liverpool website.
"It's sad, absolutely strange, because he is the only captain I had here at Liverpool, but I think it is exciting for him as well.
"We will miss him, without a shadow of a doubt, that's clear - as a man and as a player. But that's football."
Henderson's goodbye message
Liverpool's announcement comes after Henderson posted a goodbye message on social media on Wednesday.
Writing on Instagram, Henderson said: "It's hard to put these last 12 years into words and it's even harder to say goodbye. I will always be a Red. Until the day I die.
"Thank you for everything. You'll never walk alone."
Henderson made 360 top-flight appearances for Liverpool and captained them for nearly nine years, from September 2014.
He led them to the 2019/20 title as the Reds lifted the Premier League Trophy for the first time.
He also skippered the club to UEFA Champions League glory in 2018/19 and FA Cup success in 2021/22, while one of his two EFL Cup winner's medals came as captain.
Additionally, Henderson helped inspire Liverpool to win the UEFA Super Cup and FIFA Club World Cup in 2019/20, and the Community Shield last summer.