He will remain available for selection for England, but not as captain.
"On November 15, 2000 Peter Taylor gave me the greatest honour of my career in making me the captain of England, fulfilling my childhood dream," said the former Manchester United player.
"Now, almost six years later, after being captain for 58 of my 95 caps, I feel the time is right to pass on the armband as we enter in a new era under Steve McClaren.
"It has been an honour and a privilege to have captained our country and I want to stress that I wish to continue to play for England and look forward to helping both the new captain and Steve McClaren in any way I can."
The right midfielder has actually only won 94 caps, however the coach for much of his time Sven Goran Eriksson was surprised but proud of his decision.
"He's been a very good captain and very proud to do the job," the outgoing manager said.
"I was a bit surprised when he told me but you have to respect his decision.
"It is now Steve McClaren's job to decide on Beckham's successor. He has a lot of choices that are more than capable of doing the job. It is very much up to him."
The player who has bridged the gap between sports star and celebrity and earns an estimated 32 million dollars a year, said he had been planning the announcement for a while.
"I came to this decision some time ago but I had hoped to annnounce it on the back of a successful World Cup. Sadly that wasn't to be," said the Real Madrid superstar.
"This decision has been the most difficult of my career to date. But after discussing it with my family and those closest to me I feel the time is right."
Beckham said the team was devastated by their loss but he was proud of his players.
"Our performance during this World Cup has not been enough to progress further and both myself and all the players regret that and are hurt by that more than people realise," the 31 year old said.
"I wish to thank all the players for their support during my time as captian, as well as Peter Taylor, Sven and all the coaches.
"I would also like to thank the press and of course all the England supporters who have both been great to me and my teammates. I want them to know for me it has been an absolute honour.
"Finally, I have lived the dream, I am extremely proud to have worn the armband and been captain of England and for that I will also be grateful," he told reporters.
In what was likely to be his last World Cup appearance, Beckham was substituted against Portugal after picking up an injury.
Chelsea’s John Terry and Liverpool’s Steven Gerrard are amongst the favourites to take over the captaincy.