3 April 2014
Last updated at 17:40 ET
Letterman, who will be 67 next week, began hosting the show on CBS in August 1993, after leaving the rival NBC network.
He began his TV career in 1978 on the CBS variety series Mary, starring Mary Tyler Moore.
His show has since won a host of TV awards.
During the taping of Thursday's show, Letterman said he had informed his CBS bosses that he would step down in about a year's time, when his current contract expires.
The news comes nearly two months after Jay Leno retired as host of NBC's "The Tonight Show".
Correspondents say both Leno and Letterman had seen their ratings fall as rival TV presenter Jimmy Kimmel on ABC's Jimmy Kimmel Live gained popularity with a younger audience.
US TV host David Letterman to retire in 2015
To see videos:
http://www.bbc.com/news/world-us-canada-26878195
David Letterman's guests have included US President Barack Obama
Veteran US late-night TV host David Letterman is to retire in 2015, broadcaster CBS has announced.
The announcement was made by the star during a recording of Late Show with David Letterman, CBS added.Letterman, who will be 67 next week, began hosting the show on CBS in August 1993, after leaving the rival NBC network.
He began his TV career in 1978 on the CBS variety series Mary, starring Mary Tyler Moore.
David Cameron is challenged by David Letterman to name the composer behind the patriotic song Rule Britannia
Boris Johnson "London is unlike any other European city"
During the taping of Thursday's show, Letterman said he had informed his CBS bosses that he would step down in about a year's time, when his current contract expires.
The news comes nearly two months after Jay Leno retired as host of NBC's "The Tonight Show".
Correspondents say both Leno and Letterman had seen their ratings fall as rival TV presenter Jimmy Kimmel on ABC's Jimmy Kimmel Live gained popularity with a younger audience.
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