The popular Englishman's final international match will be the one-day International between England and Australia at The Oval on July 12 before he bows out from all senior umpiring at the end of the English county season.
Shepherd, 64, will retire with an umpiring world record of one-day matches, having already stood in 165 limited overs contests, and 92 Test matches.
His final Test match will be the second game of the series between West Indies and Pakistan in Jamaica next month.
"Cricket has been my life for 40 years as a player and then umpire," said Shepherd who played first-class cricket for Gloucestershire between 1965-79.
"I have enjoyed a wonderful career and it has been a very difficult decision to leave a job that I love. I seriously believe, however, that it is better to go at five to nine rather than five past," added Shepherd, who has also stood in the last three World Cup finals in India, England and South Africa.
ICC chief executive Malcolm Speed added: "David Shepherd has consistently been one of our sport's top officials for over two decades. His astute decision-making and cheerful manner earned him the respect of players throughout the cricket world and he will deservedly be remembered as one of our sport's greatest ever umpires."
The portly Shepherd's habit of hopping from one foot to another when the score rests on 111 brought the English cricket superstition of 'Nelson' to a wider international audience.
His retirement comes 200 years after the death of British admiral Lord Horatio Nelson at the Battle of Trafalgar.
Nelson is said to have inspired the nickname for 111 on account of the mistaken belief he had lost one eye, one arm and one leg in battle even though, despite his other injuries, he retained the use of both legs.