Hearst News Service, for which Thomas is a columnist, reported her retirement announcement Monday.
Her retirement is effective immediately. She began covering the White House in 1960.
Thomas has apologized for the comments, which were captured on video by an interviewer for the website “RabbiLIVE.com.”
On the May 27 video, Thomas says Israelis should "get the hell out of Palestine," suggesting they go to Germany, Poland or the U.S.
Those remarks drew sharp criticism from the Obama administration earlier Monday, as well as the cancellation of a high school graduation speech she was to deliver.
White House press secretary Robert Gibbs was asked at his daily briefing with reporters about President Barack Obama's reaction to Thomas' remarks. Gibbs called them "offensive and reprehensible."
"She should and has apologized," Gibbs said. "Because obviously those remarks do not reflect certainly the opinion of most of the people here and certainly not of the administration."
Thomas had been scheduled to speak at the June 14 graduation of Walt Whitman High School in the Washington suburb of Bethesda, Md., but Principal Alan Goodwin wrote in a Sunday e-mail to students and parents that she was being replaced.
"Graduation celebrations are not the venue for divisiveness," Goodwin wrote.
She added: "They do not reflect my heart-felt belief that peace will come to the Middle East only when all parties recognize the need for mutual respect and tolerance. May that day come soon."
The national director of the Anti-Defamation League, Abraham H. Foxman, said Sunday that Thomas' apology didn't go far enough.
"Her suggestion that Israelis should go back to Poland and Germany is bigoted and shows a profound ignorance of history," Foxman said in a statement. "We believe Thomas needs to make a more forceful and sincere apology for the pain her remarks have caused."
Thomas, 89, began her long career with the wire service United Press International in 1943, and started covering the White House in 1960, according to a biography posted on her website. She became a columnist for Hearst in 2000.