The 69-year-old made the announcement while analysing Liverpool's dramatic 4-3 win over Tottenham Hotspurs in the Premier League on Sunday.
Souness assumed the role in the 2008 following his departure as manager of Newcastle United and has earned a reputation as one of the straight-talking pundits around.
The former Liverpool, Rangers and Scotland midfielder said on the broadcaster’s Super Sunday programme: “I have to say, for me I decided that football management wasn’t for me anymore. I had totally the wrong temperament for it and personality.
“I was given an opportunity to do this and it has been magnificent. It has just been the most fantastic time for me. I love football and I care for it and I worry about it going forward.
“But in Sky’s hands it’s in safe hands and I think over the years we have treated the Premier League with great detail and I think we look after football very well.
“For me personally I have got the buzz of live football, coming to some fantastic games and some fantastic stadiums and witnessing some great events.
“I think I owe a hundred apologies but I haven’t got time for that to people that I may have said some harsh things.
“I think people at home want to see us not always agree, but it has been great and I am amongst friends.
“Nothing goes on forever, I have got lots of things coming up. It has been great, so thank you to everyone.”
Sky Sports director of football Gary Hughes said: "We will miss Graeme's no-nonsense approach in the studio - matched only by his playing style.
"The insight and winning mentality he brought to our viewers as a result of his years' of experience as both a player and a manager has been invaluable to our coverage. We wish him all the best for the future."
Souness has also managed Blackburn Rovers, Southampton and Galatasaray and enjoyed an illustrious playing career with Middlesbrough, Rangers, Sampdoria among others.
