After a record 442 games since he debuted for the Magpies back in 2006, Pendlebury will be an effective on-field coach for the Suns in 2027.
The 38-year-old missed Collingwood's wildcard-final defeat to the Western Bulldogs due to a hamstring injury.
Pendlebury was hurt early in last week's loss to the Brisbane Lions and would have needed the Pies to make at least the semi-finals to have been a chance of playing again this season.
Next year will almost certainly be Pendlebury's final season as a player, before he transitions into coaching.
"The privilege of pulling on the Collingwood jumper has never been lost on me," Pendlebury said.
"This decision has not come lightly, but I know this is the best thing for me and my family as I transition into the next phase of my football journey.
"And while my next chapter won't be in the black and white, it's hard to put into words what the Collingwood Football Club means to me."
Magpies coach Craig McRae said Pendlebury's legacy wouldn't be just the games played.
"We're all incredibly grateful for the impact he's had," McRae said.
"He turns up every day with real humility, a willingness to learn and a genuine care for the people around him.
"We talk a lot about legacy in footy, but Scott's legacy isn't just the games or the records; it's the impact he's had on people.
"At the Collingwood, we live in a state of growth mindset with no ceilings and he has led this from the front. He has been an incredible role model for his teammates and the wider club."
The Magpies formally farewelled fellow two-time premiership hero Steele Sidebottom on Friday night.
Sidebottom had already announced his retirement, but was given a farewell after the loss against the Bulldogs following his 375th game.
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