Souter, in a brief letter to the president, said "When the Supreme Court rises for the summer recess this year, I intend to retire from active service as a justice." The current term is expected to end in late June.
President Barack Obama - breaking into the daily White House news briefing - thanked Souter for his service and said he will choose as his replacement someone who understands "the realities" people go through every day, and someone who understands "the rule of law."
The president said he also will seek someone with a "sharp, independent mind" who has integrity and strives for excellence.
He described Souter as "not only a good judge, but a good person," adding, "I'm incredibly grateful for his good service."
"I wish him safe travels on his journey home and on the road ahead," the president said.