Loretta, who played for five teams over a 15-year career, will join the Padres as a special assistant to the baseball operations staff.
"It was a culmination of several things ... a lot of things came together to make me feel as if it was time," Loretta said. "I knew [general manager] Jed [Hoyer] in Boston and being able to come back to the Padres was a draw.
"Also, I wanted to end my career on a positive note. Last year with the Dodgers was a great year from a team standpoint, I got a big hit [game-winning RBI single in Game 2 of the NLDS] and I got to play for Joe Torre."
Loretta played three seasons for the Padres (2002-05) and hit .314 with a .377 on-base percentage.
In 2004, Loretta set career highs in hits (208), doubles (47), home runs (16), RBIs (76), runs scored (108), batting average (.335), slugging percentage (.495) and on-base percentage (.391) in being named the Padres team MVP for the second consecutive season.
"To be able to come back to the Padres, I feel like I had my best seasons as a player in San Diego," Loretta said. "It just seemed to work out. I've lived in San Diego since 2003 and this is really home for us."
In his career, Loretta also played for the Brewers (1995-2002), Astros (2002, 2007-08), Red Sox (2006) and Dodgers (2009). He was a career .295 hitter and a two-time All-Star (2004, 2006).
Loretta said he's open-minded about the future and what will happen. He's not ruling out the idea of managing some day or working in the front office on a full-time basis.
"When you say the word retirement, it sounds like your retiring from life. I'm looking at this as the next step," Loretta said. "I'm interested in how teams market themselves and business development.
"We don't have anything set in stone. Jed is allowing me to experience and learn a whole different side of things. I'm looking at this year as an open-ended situation. I think that it will allow me to make decision on what I want to do."
Loretta hit.280 or higher in 12 consecutive seasons from 1997-2008, including a three-year stretch during which he hit over .300 (2002-04).
"We are incredibly excited to add Mark to our staff," Hoyer said in a press release. "He had a long and successful playing career and earned the respect of every team he joined along the way.
"I was with Mark for one season in Boston and it was clear to me that he could have a great impact on an organization in a front-office role once he finished his playing career ... I was eager to bring Mark on-board to help in all aspects of the department."
Major League Baseball Players Association executive director Michael Weiner praised Loretta in a statement: "For many years, the MLBPA has benefited from Mark Loretta's dedication, insight and leadership. The members and staff of the union congratulate Mark for his accomplishments on and off the field, and we wish him well as he joins the Padres' front office. I know Mark will continue to contribute meaningfully to the game."
Corey Brock is a reporter for MLB.com. This story was not subject to the approval of Major League Baseball or its clubs.