The 37-year-old is currently on the books at Harlequins, but will end his playing duties this summer before taking on a permanent coaching role at the Premiership club.
The decision brings an end to a glittering career that saw Jones make 95 Test appearances for Wales and five for the British and Irish Lions.
Jones helped Wales to three Grand Slams during his international career, which came to an end in 2015 following his 100th Test appearance.
"A lot of people probably thought I already was retired because I haven't been on the pitch this year, but I gave it another go this year in a player-coach role and have been lucky enough to have been given that shot by Harlequins," he told BBC Wales.
"I haven't missed playing. It's not been like every weekend I've been itching to get on the field. At the moment I'm scrum coaching - that keeps you in the game.
"I'm very pleased with my knock. When I first played for Neath I never thought I'd do what I did or get as far as I did because I didn't come through the system at age-grade and all that. It's been an amazing career, a fantastic 18 years."
Jones, who spent the bulk of his club career with Ospreys, has not featured for Harlequins so far this season.