The Uruguayan-born Socceroo will transition into a football department role at the A-Leagues club after his contract expired at the end of the 2024-25 season.
Arriving in the domestic league after joining Melbourne City in 2015, Fornaroli leaves as one of the competition's greatest imports.
The 38-year-old has scored 113 goals across stints with City, Perth Glory and Victory - the third most in the league.
Fornaroli will work in talent management and identification at Victory, while continuing to play locally as he studies business management.
"I am very grateful for my time as a player with Melbourne Victory and for all of the love and support I have received from the fans," Fornaroli said in a club statement.
"We had a great three seasons with two grand finals, helping me get back into the Socceroos where I had an opportunity to play in the Asian Cup, which is a highlight for any footballer.
"I am really happy to be given the opportunity to continue contributing to the Club's growth off the field, where I think my international experience and love of the game can help our players and our teams."
Fornaroli joined Victory in 2022 from Perth Glory, helping the four-time champions reach back-to-back grand finals from 2023.
The striker's stunning form with 18 goals in the lead-up to the 2023 grand final led to his return to the Socceroos team for the 2024 AFC Asian Cup.
Fornaroli played in last season's 1-0 grand-final defeat to rivals City, in what would be his last game and 75th appearance for Victory.
He retires after seven games for the national team.
"Bruno has a special place in everybody's hearts, so we are delighted that he is continuing with Melbourne Victory, albeit in an off-field role," Victory football director John Didulica said in a statement.
"Like everyone who follows Australian football, we have loved the highlights and moments that Bruno brought to our sport.
"He plays football with the passion of a fan, which is why he has become such an iconic figure for Melbourne Victory and for the A-League in general."
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