The 57-year-old American, who was manager of the St. Louis Cardinals from 2018-2021, led the Padres to the first back-to-back 90-win campaigns in Padres history.
"The grind of the baseball season has taken a severe toll on me mentally, physically, and emotionally," Shildt wrote in a letter announcing his departure.
"While it has always been about serving others, it's time I take care of myself and exit on my terms."
Shildt had signed a contract extension last October that took him through the 2027 season.
"It is with a heavy but full heart that I am announcing my retirement from managing the San Diego Padres," he wrote.
"It is a decision that I thought about during the season and became at peace with over the last 10 days."
"We fell short of the ultimate goal, but I am proud of what the players, staff, and organization were able to accomplish the last two seasons."
The Padres, who had not made playoff trips in back-to-back seasons since 2005-06, went 93-69 last year and 90-72 this season. They lost last year in the playoffs to the eventual champion Los Angeles Dodgers and fell this month to the Chicago Cubs in the NL Wild Card round.
Shildt went 183-141 over two seasons and 5-5 in the playoffs with the Padres. Overall, his MLB managerial record is 435-340, including a 2019 National League Manager of the Year Award.
He started out as a high school coach in North Carolina before moving up to UNC Charlotte, where he spent five years. He became an MLB scout for three years before eventually becoming a minor league manager for 13 years and a major league one for six.
Preller said the team has already started looking for a new manager.