Drafted in 1994 by San Jose, the 39-year-old Nabokov is the Sharks franchise leader in games played for a goalie with 563, wins with 154 and shutouts with 50.
The player fondly known as "Nabby" was traded to San Jose for one day just so he could retire as a Shark.
In a statement, Nabokov said: "Growing up in Kazakhstan in the 1980's, I never could have dreamed of making it to the NHL and playing against the best players in the world. I'm really proud to be able to finish my career where I started in San Jose and where I had my best years. This is my home and this is where my heart is."
On Wednesday, after the announcement, Twitter was filled with well-wishes for the star hockey player.
The Associated Press contributed to this report.