The Steelers made the announcement Friday morning.
Polamalu told the newspaper on Thursday his decision to walk away from the game ultimately came down to wanting to spend more time with his wife, Theodora, and young sons, Paisios and Ephram.
"Since the end of the season I've had a chance to enjoy my family on a level that I never had before. It was awesome," Polamalu told the newspaper.
"Thank God football has provided me the ability to be able to sit back and see what the options are. But I'll definitely be the best father I can be."
Polamalu added with a laugh: "Maybe it was a sign for me to retire when I chase my kids around and couldn't catch them. It was either a sign for me to retire or a sign for them to begin training."
Polamalu informed the Steelers of his decision Wednesday night, the Herald-Standard reported.
"Troy is a shining example of a football man in the way he loved the game, the way he respected the game and the way he played the game," Steelers coach Mike Tomlin said in a team-issued statement. "It's a shining example of the window into who he is. He is a legendary Steeler and a legendary man. I congratulate him and wish him nothing but the best moving forward."
The Steelers had been patient with Polamalu, who turns 34 later this month, hoping he would retire rather than forcing them to release one of the most beloved and unforgettable players in franchise history.
Polamalu said he realized this week that the time had come to call it a career, one in which he won two Super Bowls and made eight Pro Bowls but also saw his skills decline last season.
Polamalu started 12 games for the Steelers in 2014 -- he missed four contests because of a knee injury -- and did not intercept a pass or record a sack in a season for only the second time in his career. The Steelers went 11-5 and won the AFC North, but after an early January wild-card loss to the Baltimore Ravens, Polamalu acknowledged he might have played his final game for the Steelers.
Polamalu had two years left on his contract and was due a base salary of $6 million this year.
In the team's statement, Steelers chairman Dan Rooney said, in part: "He's been a tremendous leader, really a leader by example, not only as a great football player but as a great person. He has influenced many people both on and off the field, which was really an important part. We've been fortunate to have great players throughout the years, but he of course would be one of the top players. He did everything with dignity and responsibility, and it was special to have Troy be a Steeler his entire career."
Polamalu said he did not seriously consider playing elsewhere but admitted it took awhile to warm up to the idea of retiring.
"I had talked to a lot of people about what I should do with my situation, and what they kept saying back to me, and which was not a sufficient reason, was, 'Troy, you played 12 years in the NFL, you won Super Bowls, won individual awards. You have a legacy,'" Polamalu told the Herald-Standard. "And I just kept saying, 'First of all I don't care about a legacy. Second of all I play the game because I enjoy it.'"
He added: "But when I started this process and started to debate whether I should come back or should I play, that was kind of the sign for me to say 'Whoa, if you're just even debating it maybe you shouldn't play anymore,' because what I do know about this game is it takes a lot -- a lot -- of commitment just to be an average player."
Polamalu, who is deeply religious, said he realized it was time to retire while in church this week, which is the Holy Week for the Greek Orthodox church.
Polamalu, a first-round draft pick (No. 16 overall) of the Steelers in 2003 out of USC, finishes his career with 32 interceptions, tied for seventh-most in franchise history. He returned three of the interceptions for touchdowns, recovered seven fumbles and collected a dozen sacks.
An eight-time Pro Bowler and the 2010 NFL Defensive Player of the Year, he is considered a future Pro Football Hall of Famer and one of the greatest safeties of his generation.
His departure is the latest in a series of significant changes to a defense in the midst of a generational shift. Hall of Fame defensive coordinator Dick LeBeau did not have his contract renewed in January, and free-agent linebacker Jason Worilds opted to retire at the age of 27.
The Steelers likely will turn to third-year safety Shamarko Thomas to replace Polamalu. Polamalu invited Thomas out to the West Coast to train last spring, workouts Thomas joked were akin to learning how to be a ninja.
Polamalu said the one reason he initially resisted the Steelers' overtures to retire is that he thinks the organization is close to winning another Super Bowl.
"Part of the reason I wanted to come back was they're talented, they're really talented," Polamalu said. "I think it's an exciting time to be a Steeler. I do know one thing is that (sheer) talent doesn't win Super Bowls. There has to be another component there. I do think the team next year can be really successful. How successful only time will tell."
The Associated Press contributed to this report.