The 31-year-old played 270 games and kicked 926 goals since being drafted by the Bombers in 1995.
He walked through the doors of Windy Hill as a 16-year-old schoolboy and now leaves as a club legend and leading goal-kicker.
Speaking to media today, Lloyd said he knew the time was right.
“I have always been of the belief that I would rather go a year too early than a year too late and I’ve decided that now is the right time,"" he said.
“For me it is a celebration of the career that I have been able to have at this wonderful club over 15 seasons - it is not something that I am commiserating.
""I’ve probably had 99 percent of people saying to play on but everything kept coming back to me feeling like this was my time from a physical and mental point of view.
“The role of a forward is harder than it ever was before and if you haven’t got 100 percent hunger to commit to this great game then you won’t survive.
“I know that this choice is the best one and is a happy one.""
To see the full interview and Peter Jackson and media questions on Bomber.tv click here.
Lloyd was surrounded by family, friends, staff, the football department and past and current teammates for the announcement today.
He said he has been considering his playing future since mid-season adding that it isn’t a decision he has taken lightly.
“It is something I have been thinking about for a long time now,"" Lloyd said.
“I fought back pretty hard after tearing my hamstring off the bone and I probably thought that this would be my last contract and I have been thinking about it since early on in the season.
“I was offered a fantastic contract and was told what my role would be next year but I’ve decided that I don’t have the hunger to play anymore and it is as simple as that.
“You don’t go into a pre-season if you are fatigued mentally and physically like I am.”
The champion forward won three Coleman Medals (2000, 2002 and 2003), was named in the All-Australian side five times (1998, 1999, 2000, 2001 and 2003) and played in the 2000 pre-season and home-and-way premierships.
Lloyd has been captain of the Bombers since late 2005 and, in a unique combination, won the AFL goal of the year in 2007 and AFL mark of the year in 2008.
To purchase tickets to the 30th September, 2009 Crichton Medal click here or to book a ticket to the annual The Long Walk - 2009 Women's Luncheon on 9th October click here.
Matthew Knights said the club will miss Lloyd on and off-field but that he respects his decision.
“Lloydy is a champion player and has fantastic values as a person - he will leave a lasting legacy at Windy Hill and will be remembered as one of the true greats of this club,” Knights said.
“We were hoping he would continue playing in 2010 but he believes that the time is right to retire and we respect his decision.”
The club is currently considering a number of options recognize Lloyd's contribution to the Essendon Football Club and give the fans a chance to say farewell.
To leave a special message for Matthew Lloyd click here.
