Cochran, who chairs the powerful Senate Appropriations Committee, said he would be stepping down on April 1, after 40 years in office.
"I regret my health has become an ongoing challenge," Cochran, who is 80, said in a statement.
"I intend to fulfill my responsibilities and commitments to the people of Mississippi and the Senate through the completion of the 2018 appropriations cycle, after which I will formally retire from the US Senate," he added.
"My hope is by making this announcement now, a smooth transition can be ensured."
Cochran has faced health issues since at least last year.
He is the 10th-longest serving senator in US history. A courteous southerner, he was first elected to the Senate in 1978, becoming the first Republican in more than a century to win a statewide election in Mississippi.
Cochran's retirement means Mississippi, which traditionally votes Republican, could face the rare prospect of holding elections for both of its senators in November, as Roger Wicker is up for re-election this year.
Under Mississippi law, the governor has 10 days to appoint Cochran's replacement, who will serve in the seat until a special election is held.