Lopez, who sat out all of last season, decided against trying to extend his 15-year career in the minors. He batted only .188 this spring in his attempt to become Brian McCann's backup.
Lopez was cut by the Colorado Rockies last spring and didn't play at all in 2007. He signed a minor league deal in December with Atlanta, where he played from 1992-2003.
"It didn't happen in spring training," Lopez said. "This is the only chance I get. They give me the opportunity to come back and prove to myself that I can still play. I had the chance and didn't do what I'm supposed to do, or at least not good enough."
Lopez made his decision after meeting with manager Bobby Cox on Saturday.
"Hopefully, he can still continue in the organization, get some at-bats and see what happens," Cox said.
Lopez chose to retire instead, saying his body felt strong but he was not satisfied with his hitting or his lack of success throwing out baserunners.
He did hit a couple of balls hard while going 1-for-5 as the designated hitter against Cleveland on Friday. He drove in a run with a first-inning single off C.C. Sabathia.
"I feel perfect physically," Lopez said. "It's just that the hitting wasn't there and unfortunately I didn't throw the guy out on the stealing attempts. That's a concern. I don't blame them. My role as a backup catcher is to be able to throw every single runner out."
Lopez finished his career as a .287 hitter with 260 home runs and 864 RBI. He was an All-Star with the Braves in 1997, 1998 and 2003.
His best year was '03, when he hit .328 with 43 homers and drove in 109 runs, becoming only the third catcher in history with 40 homers, 100 RBIs and a .300 batting average.
Lopez signed with Baltimore before the 2004 season and spent part of '06 with Boston.