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Torres, 34, has started only three La Liga matches this season and made 17 appearances from the bench, scoring two goals.
“I want to take advantage of this opportunity to say this will be my last season at the club,” Torres said at a promotional event on Monday.
“It has not been an easy decision. Looking at the reality, the circumstances, perhaps it’s for the best. I accept that I’m not having much of a role, so perhaps this is the moment to step aside for others.”
The Spanish striker is in his second spell at the club he left in 2007 to sign for Liverpool. He also had stints at Chelsea and AC Milan before returning to Spain in 2015.
“It’s difficult to say goodbye for a second time because I wanted to retire here, but things don’t always go as you want,” added Torres.
“I feel physically and mentally able to keep playing. I am in good shape and I will look elsewhere for games.”